Blog Archives - PFwise.com

Market Volatility - How to Measure and How to Deal With it?

9/30/2015

Q. How is the stock market volatility measured? How to hedge against market volatility?

A. One popular measure of stock market volatility is VIX.

How to Measure Market Volatility
VIX is calculated in real time, it measures investors' sentiment by tracking how much they are paying for "out of the money" options, mostly puts rather than calls, because in the marketplace, puts activity far outweighs calls as investors' main concern is downside risk protection.

When investors' fears increase, they are willing to spend more on out of money puts, just like any type of insurance, when the purchaser feels the risk is imminent, he or she is willing to pay a high premium for insurance protection. The higher the VIX, the more fear investors have that the market will drop.

The VIX is normally around 20, but in panic times, it could shoot up to 80.

How to Deal with Market Volatility
If you sense the market's fall is imminent, you could purchase "out of money" puts to protect the downside risk. Out of money means the premium tends to be not too high. If the market does fall significantly, you will profit from the puts. If the market doesn't fall much or not falling at all, your puts will expire worthless, but your core holdings will not suffer, which is the main purpose - spend little money to protect the core investments.

Buy or Sell Small Cap Value Funds?

9/29/2015

Q. My small value fund has performed badly in the past 2 years, should I sell it and buy another fund?

A. Based on a study from Dimensional Fund Advisors, of all the major stock investment styles, small value generated the highest annualized return from 1935 to 2014 - 16.2%. Naturally, as a long term investor, you want to own small cap value stocks.

However, that is for long term performance, in the short term, there is no guarantee. The Russell 2000 Value Index has lagged the Russell 2000 Growth Index by 4.4% a year over the past 5 years.

If you happen to own one of those small value funds, it must be painful right now, but dumping the fund or not, the decision needs be made based on a lot of other considerations, including your investment time horizon, your other portfolio components, your risk tolerance level, etc. If you do regular rebalance, it might be even time to trim some winners and load more losers.

Are Smart Beta ETFs Better Than Index ETFs?

9/28/2015

Q. Do smart-beta ETFs outperform low cost index ETFs?

A. Not always.

As we have described before, smart-beta funds are a hybrid of actively managed funds and passively managed index funds. Smart-beta funds is a fast growing category, as of now there are more than 450 of these products with more to come.

Advantages of Smart-beta Funds
Compared with actively managed funds, smart-beta funds offer much lower fees. The trend is smart-beta funds' fees could be comparable to low cost index ETF funds' fees.

Compared with passively managed index funds, smart-beta funds try to beat the benchmark indexes by selecting stocks based on factors other than market value.

For example, while SPDR S&P 500 (SPY) gives the greatest weight to the largest company, a smart-beta fund could give its greatest weight to a company with the best historical risk-adjusted price return (e.g. iShares MSCI USA Momentum Factor MTUM).

Disadvantages of Smart-beta Funds
Different smart-beta funds might employ different weight factors, which makes them more like actively managed funds, the only difference is investors now would be speculating on which factors (vs. which stocks as in the active funds case) would outperform the benchmarks.

This speculative strategy will inevitably bring varied results. For example, while iShares MSCI USA Momentum Factors (MTUM) and Guggenheim S&P 500 Pure Growth (RPG) have outperformed their underlying benchmarks, iShares MSCI USA Value Factor (VLUE) and Vanguard Dividend Appreciation (VIG) have been underperformers.

The Bottom Line
A smart-beta ETF's performance is determiend by its employed strategy, which could be in or out of favor from time to time. A prudent investor could treat smart-beta ETFs as part of the portfolio, not the portfolio.

What Kind of Investor Do You Want to Be?

9/27/2015

Q. Should I be an active investor or a passive investor?

A. Generally, if we exclude those short term traders, we can put investors into two categories: active investors and passive investors.

Active Investors
An active investor is always busy, because he or she wants to study many different factors that impact the stocks he or she wants to invest.

Just imagine the list of factors active investors need to check out -

They probably will start from the macro economic conditions, will Fed raise the rate next month? Would China's devaluation of currency hurt our economy? What's the impact of gold's collapse? Which sectors will benefit from the rising rates? Which companies are best positioned in those improving sectors? Should we invest in the leader anticipating it will continue to lead, or a laggard anticipating a turnaround? How much cash does this company have right now, will generate next year? What is the PE today and the historical level? Does the recent dip of the price provide a good buying opportunity or indication of time to bail out? ...

In other words, an activate investor is someone who is energetic, confident on his or her macro and microeconomic research skills, and has good if not perfect marketing timing capabilities.

Passive Investors
If you feel the above sound like a daunting task, which it is, maybe you want to become a passive investor.

Passive investor believe they couldn't predict the future, they make investment decisions based on historical long term records, they want to diversify to reduce correlation risks, they study their risk tolerance levels and design portfolios that match the risk tolerance levels, they rebalance periodically, then off pursuing things more interesting in their lives.

The Bottom Line
The bottom line is, passive investors tend to do well over the long term, despite short term fluctuations. Active investors work very hard, with nothing guaranteed, even for the long term.

What kind of investor do you want to be?

What the Stock's Performance For the Next 15 Years Look Like?

9/26/2015

Q. Should we be bullish or bearish for the stocks at this time?

A. If you believe "reversion to the mean", you should be bullish about stocks.

Why?

From the following chart, you can see that stocks over the past 15 years have performed poorly - average 3.8% annualized return, worse than the 15-year period that ended in the bear market of 1974.

For the believers of reversion to the mean, this indicates much higher return for the next 15 years for the stocks.

3 Lessons to Read Fine Prints of Mutual Funds and ETFs

9/25/2015

Q. Why an investor needs to pay attention to fine prints of Mutual Funds or ETFs? Aren't they pretty straightforward?

A. Like most complicated financial products, investors need to read fine prints to prevent from being caught off guard when something taken for granted didn't happen. Here are 3 specific reasons one needs to read the fine prints of Mutual Funds and ETFs.

1. Trading Prices
For mutual funds, most investors know they can only be traded once a day, and most people thought the trading price is the fund's closing price, set at 4pm EST.

Wrong. As we have explained here, there are hundreds of funds whose closing prices are set before 4pm! So if your buy/sell order is submitted just before 4pm, you could be trading on next trading day's closing price!

2. Trading Multiples
Most people might thought trading multiples of a fund is pretty straightforward, for example, PE of a fund, just look at the stocks held by the fund and then do the calculation.

Unfortunately, it's not that simple. Take iShares Nasdaq Biotechnology (IBB) as an example, if you read the fine prints, you will find that most of the biotech stocks are not making money at all, therefore are excluded in the calculation. If you just use the fund's published ETF as a investment guild, you will be seriously misguided.

3. Underlying Values
For ETFs, since they can be traded in read time, you might think their trading prices should mirror their underlying value closely. Unfortunately, due to ETFs' complicated design, surprises could and did happen.

Read here about what happened on August 24, 2015 and you will see what it happens, how painful it could be for some unfortunate investors!

How to Execute the Buy and Sell Order Well?

9/24/2015

In our last blog post, we shared a little trick about finding an ETF's fair value - its intraday net asset value. When you place your buy order for that ETF, here are 3 things to note:

1. Use Limited Order
Never buy or sell at market price. If you do, think what could happen if your Sell at market price order was executed in the morning of August 24!

2. Stop-loss Order is Risky
A stop-loss sell order is executed when the stock or fund's price falls below your specified price, then it will be executed as a market price order.

3. Avoid trading at the beginning and ending of the market
The beginning and ending moments of the market day are typically volatile, avoid these periods if possible.

How to Find a ETF's Fair Value?

9/23/2015

Q. How to find an ETF's fair value?

A. Unlike traditional mutual funds that trade only once a day, ETFs trade on the exchanges continuously, which means there are times an ETF's price could be off to its real value, a lot.

For example, on August 24, the S&P 500 fell 5.3% at the opening, but the $65 billion iShares Core S&P 500 ETF (IVV) fell as much as 26% before recovering!

There is a way to find out the intraday net asset value of an ETF, here is the trick:

For any ETF, for example, IVV, type "^IVV-IV" at Yahoo Finance, you will see IVV's intraday NAV, by seeing the NAV, you can make sure you are not overpaying the ETF.

Knowing what's the true value of a fund is just the first step, next you need to execute the buying or selling order well.

Do Alternative Funds Have Better Performances? - Part B

9/22/2015

In our last blog post, we showed that the performances of alternative funds have not been impressive at all in the past 5 years. But should you dump them from your portfolio as a result of the poor performances?

The answer is, it depends on your investment objectives.

Deliver Uncorrelated Returns
The original objective of introducing alternative funds to a portfolio is to remove or reduce the portfolio's systematic risk or at least include funds with low correlations with stocks and bonds. If the alternative funds you used in your portfolio helped you meet that objective, even the alternative funds' own returns are not particularly attractive, they have fulfilled their missions.

For example, while the long/short equity funds generally move at the same direction as the broader market, their volatility is a lot less than the broader market, as shown in the previous blogpost's chart. Specifically, in the past 5 years, Long/Short Equity funds' average annual return is around 6% (vs. S&P 500's around 14%), in the period where the market was down, for example, in a period when S&P 500 was almost down 20%, the Long/Short Equity funds only down around 6%.

Another example, generally speaking, Managed Futures funds had meager returns over the past 5 years, but in 2008 when S&P 500 fell 37%, a Credit Suisse managed-futures fund rose 23%; in 2011, when the S&P 500 gained 2.1%, that same fund lost 4.9%. Clearly, this fund delivered the uncorrelated performance.

The Bottom Line
You add Alternative funds to your portfolio not to chase their returns, but to reduce your overall portfolio's risks. If this is your objective, then Alternative funds should have a place in your portfolio, but maybe a small portion, like 10%.

Do Alternative Funds Have Better Performances? - Part A

9/21/2015

Q. Do hedge-fund-like "alternative" funds have better returns than other types of funds?

A. Alternative funds became popular since the bear market of 2007-2009, as investors looked for other assets and strategies in order to diversify the traditional stocks/bonds portfolios. Unfortunately alternative funds have mixed records.

What are Alternative funds?
Below is a list of the major categories of alternative funds:

Long/short Equity funds
Energy Limited Partnership funds
Market Neutral funds
Managed Futures funds
Commodities funds
Multi-alternative funds

Do Alternative Funds Perform Better Than Stock Funds?
Unfortunately, alternative funds generally trailed S&P 500' performances in the past 5 years, as the chart below indicates.

If Alternative funds couldn't delivery stellar performances, should investors dump them from their portfolios? We will look at this question in our next blog post.

8 Uses of Life Insurance Consumers Do Not Know

9/20/2015

Q. Other than providing benefits to survivors, what are other uses of life insurance?

A. While most people are aware of the two major benefits of life insurance: paying funeral expenses and providing money to survivors, few know the following uses of Life Insurance (the so called living benefits):

Paying mortgages and debts
Paying estate taxes
Creating an estate
Providing a cash flow in retirement
Equalizing an inheritance
Paying for college
Taking out a loan/borrowing against
Funding charitable contributions

If you are interested in knowing any of the above use of Life Insurance, please contact us.

Roth IRA and Life Insurance: Similarity and Differences - Part C

9/19/2015

In our last blog post, we discussed the second difference between Roth IRA and Life Insurance. Now the third one.

#3 – There are no RMDs for life insurance

When you leave a Roth IRA to non-spouse beneficiaries, such as children, the beneficiaries must generally begin taking RMDs (required minimum distributions) from the inherited Roth IRA no later than the year after they inherit. These distributions are usually tax-free, but they must be taken nonetheless.

When beneficiaries inherit life insurance, there are no RMDs to worry about. Here’s something to consider, however. While not having to deal with RMDs is nice, that fact doesn’t necessarily make life insurance a better — or more tax-efficient — option for legacy planning than a Roth IRA.

Here is the reason: When a beneficiary inherits life insurance, the only amount they’ll receive tax-free is the actual life insurance proceeds. If they don’t need the money right away, they might invest the proceeds, but whatever interest, dividends, capital gains or other income those investments generate will be taxable (unless they are invested in assets that don’t produce taxable income, such as municipal bonds).

In contrast, while the inherited Roth IRA will have RMDs to deal with, those amounts may be relatively minimal and the future growth in the Roth IRA remains income tax-free.

Take someone who inherits a Roth IRA at age 50, for example. In this case, RMDs would start out at roughly 3 percent of the account value. The rest of the Roth IRA, however, can be left alone to grow, and that growth can later be distributed tax-free as well.

So, whereas a beneficiary of a $500,000 life insurance policy will “only” receive $500,000 income tax-free, a beneficiary inheriting a $500,000 Roth IRA may receive many times that amount in tax-free distributions over the course of their lifetime, particularly if they stick to taking only the RMD each year and no more.

The Bottom Line

If you are looking to leave a legacy to your heirs when you die, there are many tools to consider. Life insurance and Roth IRAs are but two of the many options.

In some cases, life insurance may not be available due to poor health. In other cases, such as when your beneficiaries will be in a lower bracket than they are now, there may be a greater net benefit by leaving them larger amounts of tax-deferred accounts, like IRAs instead of a smaller amount of Roth IRAs.

The bottom line: Every situation is different and there’s no one-size-fits-all solution. Surely though, Roth IRAs and life insurance offer two potentially very efficient options.

Roth IRA and Life Insurance: Similarity and Differences - Part B

9/18/2015

In our last blog post, we discussed the first Roth IRA and Life Insurance difference. Now the second one.

#2 – There’s a limit to the amount you can contribute to a Roth IRA

While insurance carriers may limit the amount of insurance they’ll offer based on various factors, including your health condition, your annual income and net worth, etc. there is no tax code restricts how much life insurance you can purchase.

Unfortunately, if they want to make annual Roth IRA contributions, tax code restrictions apply, details see here.

Furthermore, Roth IRA contributions can only be made with income that qualifies as “compensation,” which is typically earned income. In contrast, life insurance premiums can be paid with any type of income, including interest, dividends and Social Security, all of which are not considered compensation.

For that matter, if someone who has no income, he or she could simply pay for life insurance premiums from existing assets.

When many clients really begin to focus on legacy planning, they’re already retired, or close to it. Therefore, their ability to make Roth IRA contributions is usually limited. There are no similar issues with life insurance.

In our next blog post, we will discuss the third difference between Roth IRA and Life Insurance – RMDs.

Roth IRA and Life Insurance: Similarity and Differences - Part A

9/17/2015

Q. Are both Roth IRA and Life Insurance good wealth transfer tools?

A. Yes, for people who are looking to leave a legacy to their heirs, Roth IRA and Life Insurance are two of many options.  Life Insurance and Roth IRAs have a basic structure in common - they are both wealth transfer tools that help facilitate an efficient transfer of assets from one generation to the next; and they both can provide a tax-free legacy.

Despite their many similarities, Roth IRAs and life insurance are very different, and the rules that apply to one don’t always apply to the other. In fact, more often than not, that’s the case. Below, we discuss 3 of the biggest differences between the two vehicles.

#1: Roth IRAs are always included in your estate

Thanks to the 2015 $5.43 million federal exemption amount — the amount that can pass estate tax free to beneficiaries — estate tax concerns are nowhere near what they used to be. Most people will not owe federal estate tax when they die.

Yet, a small segment of the population has to contend with such concerns. Plus a number of states still impose state estate taxes; and many of those states have set their exemption amounts much lower than the one available at the federal level. In such cases, life insurance may offer an advantage over Roth IRAs.

Roth IRA
The “I” in IRA stands for individual, meaning it’s always a person's asset; and, therefore, the value of the Roth IRA is always included in that person's estate. If you are above the federal estate tax exemption amount or your applicable state estate tax exemption amount, your beneficiaries could end up owing estate tax — at the federal level, state level, or both — on what they thought were “tax-free” Roth IRA assets.

Life Insurance
Life insurance, in contrast, can be structured so that it’s outside of a person's' estates, producing not only an income tax-free benefit to their heirs, but also one that is not subject to estate tax, regardless of the value of their estate when they die. In other words, it is a truly tax-free benefit.

There are a variety of ways to accomplish this, including having an irrevocable trust (or, alternatively, let your children or other interested parties) purchase the life insurance policy. To figure out which option is best, consider bringing an estate planning attorney into the mix.

In our next blog post, we will discuss the second difference between Roth IRA and Life Insurance – contribution limits.

Do You Need an Investment Checklist?

9/16/2015

Q. Why do I need an investment checklist?

A. If you are a bargain hunter, the huge drop of Dow on Aug. 24 (down 1000 points) gave you a great buying opportunity, but only if you have an investment shopping list handy.

If you don't have one, it's probably time to build your investment checklist.

1. Reason for a List
If you have built an asset portfolio mix that is consistent with your investment risk tolerance level, now one class of assets (e.g. stocks) dropped 10% in the morning, your investment checklist should give you an indication that it's time to sell the other classes' of assets buying more stocks.

By the same token, if one of your investments declined 10% in one day, your investment checklist should prompt you to ask yourself - should I sell it or maybe even buy more (because such drop has made it even more desirable to own)?

An investment checklist helps you become an active investor rather than a reactive investor.

2. Where to Start
You can start from constructing a list of investments you would like to own or wish you could have bought more because previously you have deemed their prices are too high.

To get your inspirations, you could start by looking at recent losers, maybe they would rotate back to be winners next market cycle?

Are ETFs Better Than Mutual Funds?

9/15/2015

Q. Are ETFs better than mutual funds?

A. We have published several blog posts comparing ETFs and Mutual Funds, but with what happened on August 24, 2015, people have reasons to ask again - are ETFs really better than mutual funds?

What Happened on Aug 24, 2015?
ETFs are supposed to trade in lockstep with the stocks they own. However, on Aug 24, during the opening minutes of the market, S&P 500 fell as much as 5.3%, the $65 billion iShares Core S&P 500 ETF (IVV) fell as much as 26%, almost 20% below its fair value!

What's more scary is, IVV's big drop is not alone! Other big drops from some of the big name ETFs' include:

The $18 billion Vanguard Dividend Appreciation ETF (VIG) dropped 38%
The $12 billion SPDR S&P Dividend (SDY) plunged 38%
The PowerShares S&P 500 Low Volatility ETF (SPLV) fell as much as 46%

Indication of A Bigger Problem?
Although these ETFs' prices went back to normal after an hour of the market open, this sudden drop and big swing away from its fundamental value give investors a reason to ask: are ETFs really better than Mutual Funds?

Mutual funds only trade once a day, they tend to match the value of the underlying holdings at the market closing time. For ETFs, because they trade like stocks, many investors buy or sell at market price, these people learnt a big lesson (or caught an unexpected gift for the bargain hunters) on Aug 24!

What Caused the Big Problem?
A current explanation of such big drop is like this:

When S&P 500 index futures contracts (trade on the Chicago Mercantile Exchange) fell sharply before 9:30am on Aug 24, it triggered a trading pause. These futures contracts are used by ETF market makers as hedging tools. Also, NYSE invoked a procedural change that allows floor traders to delay the opening in a number of stocks (while Electronic exchanges opened as usual). 327 ETFs were hit with five-minute trading halts on the morning of Aug 24. 11 were halted 10 or more times. Lacking clear information about futures prices and consistent indications for where many stocks might open, market makers kep ETF bid-ask spreads wide.

A large number of trading halts in both stocks and ETFs led to even more trading halts, hindering the price recovery for many ETFs for about an hour.

As of now, the SEC has formed a special committee to review the problem and propose resolutions. ETFs are probably still a favorite for many investors, but one key learning from Aug 24 event is: always use limit orders when you buy or sell ETFs.

Are All Mutual Funds' Prices Settle at 4PM Market Close Time?

9/14/2015

Q. Is it true that as long as I put in a "buy" order for a mutual fund before the market closes, I will be able to purchase that fund at that day's close price?

A. Unfortunately the answer is no.

For most funds, as long as you submit your "buy" or "sell" order to your broker before 4pm, your order will be executed at 4pm, exceptions do exist.

For example, out of the total 16,000 or so mutual funds, several hundreds of Vanguard's funds have 3pm as the "cutoff" order execution time. This means if you submit your buy or sell order after 3pm today, your order will be executed based on the next trading day's fund price.

This is another lesson for many people - read the fine prints before you invest.

The Market Tumbles, Is It Time to Rebalance?

9/13/2015

Q. Is it time to rebalance when the market tumbles?

A. It is a good idea to rebalance if the market has dropped a lot compared to your original target asset mix.

When the market tumbles, selling relatively better performing assets and buying into stocks performed poorly can help you bring your target asset mix to the level that is consistent with your risk tolerance and goals.

This is important because "buy low and sell high" is something easy said than done. Just check your own records when you have sold a "winner" and bought a "money loser" last time. A rebalance forces an investor to execute this sound strategy.

However, there is not an universally agreed answer to the question - how often should I rebalance. It's advisable to develop a regular schedule, such as twice a year, to rebalance your investment portfolio, in this way, you can avoid emotional investing.

How to Deal With Sequence Risk?

9/12/2015

In our last blog post, we showed that it does not work for everyone to buy the market dip, because for investors who needs money from the investment accounts in the near future, the sequence risk presents a major threat to the buy dip strategy.

We will discuss 3 ways to deal with sequence risk.

a. Reduce Equity Exposure
If at the retirement time, your account holds mostly cash, obviously sequence risk does not matter to you. While that might not be a good idea to be all in cash, it shows the importance of reducing your equity exposure.

If you still want exposure to stocks, the so called "value stocks" could be the place to put your money. There are plenty of value stock funds you can invest if you pursue this strategy.

b. Purchase fixed annuities
Purchase fixed annuities can give you regular income and lifelong inflation protected payouts. There are many options in the market for annuities, talk to a broker who can help you shop around and find the best one that fits your needs. We can help if you have this need.

c. Take Home Equity Line of Credit
With a home equity line of credit, you don't incur any cost if you don't use the money. This works well at times when the market is down huge and you need money to support your daily life. You can avoid touching your down investment account by drawing money out of the home equity line of credit, and pay it back when the market goes up later.

When Buying the Market Dip Is Not a Good Idea

9/11/2015

Q. Recently the market has shown great fluctuation. Is buying the market dip a good idea?

A. Like most financial advice you might get, the answer is it depends.

If you are young and have a long investment horizon ahead, buying market dip is a great idea!

Warren Buffet wrote in 1997 that stocks are like hamburgers: if you are going to be purchasing them regularly for years to come, you shouldn't want them to go up in price. Any drop in the market is good for people who are still saving and investing for the future.

But if you are already approaching or already in your retirement, buying market dip is not a good idea at all. You need to decrease, rather than increase, your exposure to the market at this stage of life.

The reason is due to the so called "sequence risk".

What is Sequence Risk?
We have had a mini blog series discussing sequence risk before, to put it simply -

Let's say during a 30-year period, there are two market up and down sequences - one starts with down and rises toward the end; the other one starts with up but drops towards the end. Both have the same average annual rate of return, so with the same amount of money to start with, both will have the same amount of money to end with.

However, for someone like a retiree who needs to draw money regularly out of investment account to support retirement life, you can imagine which sequence will be a disaster, that is called "sequence risk".

How to deal with "sequence risk"? We will discuss in our next blog post.

You'll Regret If You Neglected This Financial Planning Step

9/10/2015

From time to time we all fail to do something we know we should do but don't and regret later.

And we all find excuses.

Some excuses are legitimate, but most don’t stand up to scrutiny.

That’s especially true when it comes to one of the most important components of sound financial planning: acquiring enough life insurance to make sure your loved ones are protected if you die sooner than you expect.

Lowest In 50 Years
You probably enjoy talking about investing, seeing your money grow, buying homes and cars, sending children to college, having enough to retire comfortably — but all of that is built on one basic assumption: that you will be alive to do and enjoy these things.

But what if you’re not? Will your spouse, partner or children be able to experience all that you hope for them? Making sure they can is what life insurance is all about.

Yet ownership of life insurance is at a 50-year low, according to the Life Insurance Marketing Association (LIMA), which says that one in every four U.S. households has no life insurance, including 11 million households with children under age 18.

Equally worrisome is the fact that the average amount of coverage for U.S. adults has dropped to $167,000, down from $300,000 a decade ago.

3 Excuses Often Cited
There are three reasons (excuses) people cite when explaining why they haven’t gotten the coverage they know they need, says LIMRA. Do any of these apply to you?

1. "It’s too expensive."

2. “I just haven’t gotten around to it.” (procrastination)

3. “I don’t know enough about it to buy it.”

Are any of these excuses valid?

Let’s see:

Too Expensive?
If you believe life insurance is too expensive, ask yourself again: compared to what? A big-screen television? Well, life insurance is a necessity, not a luxury. And it's never been more affordable. Prices are at least 50% less than they were a decade ago. A 35-year-old nonsmoking male in good health can buy a $1 million, 20-year, level-term policy for just little over $400 a year! A healthy, nonsmoking female of the same age would pay even less.

Contact us to see the best rates from all of the different providers.

Procrastinating?
If you have been procrastinating, consider this for your tombstone: “Here lies ________. His family is destitute because he was lazy.”

Also, note that life insurance is only on sale when you are young and healthy!

No Idea?
And if you think you don’t know enough about life insurance, well, that’s what we are here for. We have developed some easy to use online tools and lots of FAQs so you can get a good idea about life insurance. The next step is easy, just contact us to start the process that only takes a few minutes to complete.

You need to protect your spouse, partner and children. September is Life Insurance Awareness Month — a good time to talk to us about your need for life insurance and how to get you the coverage you need at the right price.

What To Do With 401(k) When the Market Crashes?

9/9/2015

Q. I followed your 3-step strategy and built my 401k portfolio, but it has dropped a lot recently as the market crashed. What should I do now?

A. Many investors panicked with the most recent market turmoils. This reaction is understandable, however, probably unnecessary.

Remember, our 3-step portfolio construction is for long term investments, the best strategy when the market fluctuates is probably to do as the chart below indicates - do nothing.

The Basics of Entrepreneurship

9/8/2015

What is the very basics of entrepreneurship?

You saw a problem in your own life and trying to fix it.

You figured it out.

Now you can consider doing it for others who have a similar problem.

They are willing to pay you for the fix.

Repeat.

That’s it.

No Income and Contribute to Roth IRA?

9/7/2015

Q. I am a stay at home mom with no income. Can my husband contribute to my Roth IRA account?

A. Yes, even you don't have income, your husband can contribute to your Roth IRA account, in addition to his own Roth IRA account, assume he meets the income limitations.

What Is Roth IRA Contribution Income Limit

9/6/2015

Q. I saw a few different numbers and confused, what exactly is the Roth IRA income limit?

A. Yes, there are a few different key numbers and people could easily get confused about them.

First, there is a cut-off adjusted gross income limit, for 2015:

$193,000 if married filing jointly
$131,000 if single

Then there is a phase-out adjusted gross income limit (between this limit and the cut-off point, there is a phase out contribution):

$183,000 if married filing jointly
$116,000 if single

If your income is too high, you can try either Roth 401K which has no income limit or backdoor Roth IRA conversion.

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