Call Our Office
(559) 384-2900 | Fresno
(619) 480-1413 | San Diego
(619) 480-1413 | San Diego
Your Money
Your Life
Your Way
You are now leaving the Strong Valley Wealth & Pension, LLC ("Strong Valley") website. By clicking on the "Schwab Alliance Access" link below you will be entering the Charles Schwab & Co., Inc. (“Schwab”) Website. Schwab is a registered broker-dealer, and is not affiliated with Strong Valley or any advisor(s) whose name(s) appears on this Website. Strong Valley is/are independently owned and operated. Schwab neither endorses nor recommends Strong Valley. Regardless of any referral or recommendation, Schwab does not endorse or recommend the investment strategy of any advisor. Schwab has agreements with Strong Valley under which Schwab provides Strong Valley with services related to your account. Schwab does not review the Strong Valley website(s), and makes no representation regarding the content of the Website(s). The information contained in the Strong Valley website should not be considered to be either a recommendation by Schwab or a solicitation of any offer to purchase or sell any securities.
On March 23rd, the massive, skyscraper-sized container ship named the Ever Given ran aground and got stuck in Egypt’s Suez Canal. It took about a week for more than a dozen tugboats, dredgers, engineers, salvage teams, and a full moon that brought an unusually high tide to free the behemoth.
While it’s still not clear exactly how it got stuck in the first place, experts theorize that the Ever Given lost control amidst strong winds and sandstorms. But the Ever Given’s management firm did rule out any mechanical or engine failure. Now some are suggesting that “technical or human errors” may have caused the ship to run aground, costing Egypt about $15 million a day in lost revenues.
The Ever Given, one of the largest container ships in the world, is 400 meters long (that’s over 1,300 feet), weighs 200,000 tonnes (a tonne is heavier than a ton by the way) and has the ability to carry over 20,000 shipping containers (it was carrying 18,300). It’s massive.
Do your aspirational retirement goals feel like the massive Ever Given? And are you a 40 or 50 year old captain that is now stuck? Here is a basic list of must-dos to help unstick your retirement-ship so that you might see smoother sailing.
People in their 40s and 50s should really look at maximizing everything they can do to prepare for retirement. This is especially true as our life expectancy grows longer, thanks to improvements in medical science. You should aim to maintain a reasonable retirement lifestyle for two or three decades after you “retire.” And that takes diligent saving and careful planning.
Maximizing your contributions to retirement accounts, such as 401(k)s, is the first step, The annual contribution limit is $19,500. If you reach 50, there is an additional catch-up contribution of $6,500.
If the choice is between saving for retirement and saving for college, give retirement the first priority. There are loans for education, but not for retirement.
Understanding your spending is key to determine when you can retire. Any kind of retirement plan is not going to work if you don’t know how much you spend.
By evaluating your spending, you know how much you need and how much extra money you may have to fund other financial goals in retirement.
Knowing the Social Security rules makes a huge difference, because the age you start claiming it determines your benefit income for the rest of your life.
If you begin collecting Social Security before full retirement age, you permanently reduce your monthly benefit. If you don’t know the rules, you can easily be passing up thousands of dollars of benefits.
The key to successful financial planning lies in following wise investment strategies, custom tailored to your personal aspirations. And while your financial plan should be tied to your long–term goals, short–term events (like high winds and sandstorms) need to be addressed too.
Your financial advisor can help you keep your emotions out of your investing decisions and keep you from running your retirement-ship aground.
That way you can rest comfortably at night knowing that your money is working toward your goals. Not toward hiring tugboats and dredges to dig you out.
A lot of 401(k) investors end up making the same mistakes when choosing their investments. The results are low returns and unbalanced portfolios. Avoiding these four mistakes is a good start for getting more out of your 401(k).
There is no easy answer to how you should allocate your 401(k). You have to make these decisions on your own based on your personal risk tolerance, investment choices and the allocation of your other investments.
Many 401(k) plan participants are either overwhelmed by the list of investment choices or are simply afraid to take any risk in their investments, and so put all of their savings into a money market or stable value fund. Sometimes the money market fund is the default option for their employer’s plan -- meaning their money ends up there, earning very low interest. Nobody bothers to change it.
Money market and stable value funds are basically fancy words for cash, a low risk, low return investment, and the return from cash usually lags behind inflation. This means that a 401(k) in these safe investments will probably decline in value over time. For many folks, the investment horizon is long, so you can tolerate some volatility to get the higher returns later.
Another common mistake made by investors in their 401(k)s is to invest an equal portion into each available investment option. This is called the 1/N Rule.
There are many problems with taking this approach. First, you do not need to invest in every option available in your plan. Especially now that target date retirement funds (mutual funds that change allocation based on your estimated retirement date, growing more conservative as you age) have become popular, you do not need to invest in every bond fund and every stock fund to achieve diversification. Also, each investment option has been selected based in its individual characteristics, not based on how all of the options work together.
Your employer is not suggesting that you should invest in every option, and certainly not in each equally. Every plan has a different investment line-up.
For example, let’s say your company has one money market fund, one bond fund, and eight stock funds. An equal investment into each fund results in an overall allocation of 80% stocks, 10% bonds, and 10% cash, a pretty aggressive portfolio. The employer’s intent is not to encourage each participant, regardless of age, risk tolerance, and time to retirement, to have an 80/20 allocation.
Many companies allow employees to purchase company stock in their retirement plans. As tempting as it might be to bet on a company you know very well (hey, you work there, right?), you should minimize your investment in company stock. Remember Enron, Bear Stearns and Lehman Brothers? Those employees lost their jobs and their retirement savings in one day when their companies went bankrupt.
If you are going to be laid off from your job, your company is probably in trouble, and its stock will also be low. Why would you want to bet your income and your future retirement on one company?
Investments in diversified bond and stock mutual funds will reduce this risk. As a rule of thumb, keep your investment in company stock below 10% of the total account.
When you enroll in a 401(k) plan, your employer should provide you with the recent performance of every investment option in the plan. Most investors are naturally risk-averse, and shy away from investment options that have been down recently.
The performance of small-cap and international stocks has been less than domestic large-cap stocks recently. But these funds are still excellent choices for increasing portfolio diversification. They have characteristics that can improve the overall returns and lessen the volatility of your portfolio.
Remember, risk and return are directly related. Don’t rule out investment options based on past performance alone. You might want to consult with your employer’s human resources manager or whoever manages the company’s benefits plan for help choosing the best allocation.
Or another smart move: Hire a financial advisor, who can help you figure out which mix is right for you.
What will inflation be in the coming years? The real answer is that it varies according to your age and spending patterns. Inflation wallops someone with kids in college, and might be hardly noticeable to stay-at-home types. And recent inflation will stun someone looking for a used car, but might be a yawner for someone shopping for a new car.
Inflation is a sustained increase in prices for general goods and services in the economy and is typically measured annually. Theoretically speaking, as inflation rises, every dollar you own buys a smaller amount of a good or service.
While the reported inflation rate (typically reported as the CPI or Consumer Price Index) is important for Social Security income calculations, which rise with the index, it may not accurately reflect your individual inflation rate.
On June 10th, the U.S. Bureau of Labor Statistics announced that the Consumer Price Index increased 0.6% in May after rising 0.8% in April.
But maybe more importantly, the BLS reported that the overall inflation rate rose to 5% this past year, which is the largest 12-month increase since a 5.4% increase for the period ending August 2008. But that 5% annual inflation figure masks a huge range among the individual components of inflation – and will hit each of us differently.
Consider that:
In other words, if you are in the market for a new car, you’re in luck, as the inflation on new cars (3.3%) is less than the overall inflation rate (5.4%). But if you are in the market for a used car or truck, prepare for sticker shock as used cars and trucks have increased about 6x faster than the currently high inflation rate.
Oh, and to insure your car? Well that’s way up in price too.
On the other hand, the cost of medical care has slowed down (glass-half-full).
We get to choose some financial expenses and lifestyle choices, although others we must accept. People planning to retire commonly ask how to calculate the future rate of inflation because projecting what price increases lie ahead is central to anticipating annual income needs.
Sadly, there is no magic number. And often times the assumed number can be flawed and can vary significantly from one family to the next.
For example, if you enjoy travelling, you will likely incur many service expenses including hotels, dining and transportation, thus you should expect travel inflation will be higher than the reported CPI. Travel expenses tend to increase in the early years of retirement and slow later on as people take fewer trips.
On the other hand, if you are a homebody who does your own yardwork and property improvements, then you will likely encounter lower inflation levels relative to your traveling friends (although lumber prices have skyrocketed over the past year).
The key point is that your personal inflation rate is unique based on your age and your lifestyle. The headline CPI number is important only as a general gauge.
The more we consider prices as they relate to goods of the economy – and the lifestyle of the investor – the more accurate we can be in estimating an inflation number. For now, car dealerships are loving the higher prices for used cars and trucks.
Talk to your financial advisor to make sure you accurately project for inflation as you think about your retirement plans.
Will the proposed policies of the Biden Administration have a negative or positive impact on your healthcare? A prevailing view – by about half of the country – is that a Biden Administration will have a positive impact. Another prevailing view – also by about half of the country – is that it will be negative.
Well, no matter your political affiliation, the impact that the Biden Administration will have on your healthcare won’t be settled for quite some time. But more importantly, you should remember that no matter the big-picture changes, healthcare – like retirement planning – is personal.
Nevertheless, let’s examine a few of President Biden’s policies that will likely impact healthcare in general – as it might help you determine whether the impact will be negative or positive to you and your family.
First, remember that no political party has been exclusively great or awful for healthcare – just as no political party has been exclusively great or awful for the stock markets. And while many might view Republican presidents as more bullish and Democratic presidents as more bearish, the data just doesn’t support those views.
Further, while presidential policies do matter, the reality is that policies will not impact individuals and families uniformly. In a country of 328 million, some will benefit from certain policies more and others will benefit less.
According to the U.S. Census Bureau, 9.2% of Americans (that’s about 30 million) did not have health insurance at any point during the year 2019. The better news is that more than 90% of Americans did have health insurance coverage for all or part of 2019 (2020 data not compiled yet). Further:
While the details are still emerging (and might change by the time you’re reading this), at 30,000-feet, the Biden Administration aims to expand Obamacare so that 97% of Americans are insured. And the proposed cost is estimated at $750 billion over 10 years.
Big picture, the Biden proposals call for:
Keep in mind that Biden Administration is still negotiating the details with Congress and there will be a number of changes throughout the next few months.
Further, remember that no matter your political affiliation, the impact that the Biden Administration’s policies will have on your health care won’t be settled for quite some time.
Finally, never forget that health care – like retirement planning – is very personal.
If you have questions, talk to your advisor.
On bright and sunny summer days, the allure of the water can be irresistible. If you live near a lake, river, or ocean, boating trips may be the perfect getaway when warm weather hits. But before you set sail, take some time to consider whether you and your passengers meet the required safety standards and are prepared for any unforeseen events.
Boating can be a lot of fun, but it can also be dangerous. The U.S. Coast Guard reported that last year, there were 4,168 accidents that involved 613 deaths, 2,559 injuries and approximately $55 million dollars of damage to property as a result of recreational boating accidents. The fatality rate was 5.2 deaths per 100,000 registered recreational vessels.
Fortunately, the Coast Guard statistics also reveal that the number of accidents and fatalities seems to be on the decline, as compared to previous years. To further this trend, the Coast Guard offers online boating safety tips at www.uscgboating.org, along with the opportunity to take online boating safety courses and earn certifications.
However, the potential for mishaps and liabilities has made boat owners increasingly aware of the need for boat owners insurance.
A typical boat owner’s policy can provide protection for your boat, motor, and equipment against damages incurred by weather, sinking, capsizing, stranding, explosion, fire, and theft.
A policy can also help safeguard boating equipment, which may include anchors, oars, fuel tanks, life jackets, dinghies, tools, and canopies.
Liability coverage is also offered as legal protection against damages inflicted by the use of your boat, and it may also cover medical treatment needed by your occupants as a result of an accident.
You may choose to add additional coverage to your policy. Some examples of endorsements include emergency services, such as towing and pre-hurricane haul-out.
Additional coverage add-ons could insure personal effects, fishing tackle, and replacement cost motor coverage.
In some cases, discounted policy rates may apply for owners who have taken boating safety courses or have good operating records; or if the age of the boat and the ages of all operators are deemed favorable.
When selecting a boat owner’s policy, ask questions. Some topics you might want to discuss include the following:
When applying for a boat owners insurance policy, be prepared to supply the following information:
Taking a few minutes to answer these questions can help determine the appropriate coverage that will protect both you and your loved ones. Routine safety checks should also be a part of your protection plan.
With the purchase of boat owner’s insurance, you may be a step ahead in protecting yourself from the sometimes unpredictable elements of the sea.
If you need to discuss your boat coverage options, talk to your financial advisor.
Job seekers and HR executives have known for decades that it’s not just about salaries – employee benefits programs are great recruiting and retention tools. But what is considered a great benefits package in 2021 is very different from what was considered a great benefits package 25 years ago.
In fact, with the pandemic disrupting businesses for most of last year and into this year, employers recognize that benefit plans need to adapt even further in order to compete for and retain the best talent.
Let’s examine a few trends to watch this year and next.
The Society for Human Resource Management reported that health insurance premiums have increased by a whopping 54% over the past decade. But employees have eaten most of the increase as they have been hit with about 70% of the increase in premiums. Given how disruptive COVID was to the employment landscape and incomes – plus the disruption to businesses – it is reasonable to assume that both employees and employers cannot afford rising premiums again this year.
So where can healthcare costs be reduced? By contracting directly with service providers rather than going through an intermediary. In other words, employers that have the ability to contract directly with service providers might do so versus going through multiple intermediaries.
For example, the concept of setting up a primary care clinic on site might make economic sense for larger employers, while providing convenience for employees.
COVID-19 forced individuals to utilize telehealth benefits for routine checkups as well as for more specialized care. And while most will say it took some getting used to, most might also admit that the convenience and treatment were both good.
Sure, it was not the same as meeting face to face with your healthcare provider, but telehealth did eliminate travel time and waiting times in doctors’ offices. And it was more efficient for care providers too.
As COVID recedes from our communities, telehealth will not.
Employees have recognized that allowing employees to customize their benefits can actually reduce costs, while allowing employees to feel special.
For example, an employer might offer everyone a basic health package along with a set amount of time off, but then allow employees to add options from a menu of benefits so that their overall package is tailored to their specific needs. These options might include pet insurance or access to legal services, for example. And employees are more likely to help cover the costs of a customized package versus a one-size-fits-all plan.
No doubt you have seen news reports of the increase in mental health challenges given the shutdowns to our nation’s schools and businesses. And the impact to our collective mental health will not simply disappear as more of us get vaccinated. So employers know that helping employees reduce stress will help their bottom line.
Going forward, you can expect to see more Employee Assistance Programs that encourage periodic mental health checkups.
Have you ever wondered how much life insurance is “enough”? One general rule of thumb says that you should buy an amount equal to five to seven times your annual income. Sure, it may be a reasonable guideline, but this method does not relate life insurance needs to your personal financial goals.
A better method may be to implement a “needs analysis.” This process helps you determine the future short-term and long-term financial needs of you and your family. Once your needs have been identified, you can design a plan to help assure that money will be available to meet those objectives.
Needs analysis is not the highly technical financial planning associated with business ownership or planning for the conservation, distribution, and coordination of wealthy individuals’ assets. Rather, it is appropriate for everyone. By assigning a specific dollar value to each item or “need” you want to provide for, needs analysis zeroes in on what may still be required, in terms of additional capital, to get the job done.
Through specific questions designed to identify areas of concern, you will be able to establish your financial priorities. Here are some examples:
For most people, needs typically revolve around attaining and maintaining a comfortable lifestyle. This often translates into a good home, the advantages of a college education for your children, enough income left over for leisure activities, and last but not least, a retirement income sufficient to maintain your lifestyle when your working years are over.
While saving and investing will undoubtedly be part of your overall planning strategy, it takes time to accumulate a pool of capital. One advantage of life insurance is that it creates an instant estate, which helps assure that money will be available to aid in meeting specific goals in case an untimely event (such as an early death) deprives you of the time required for wealth accumulation.
A complete needs analysis helps determine what is important in creating and protecting the lifestyle you and your family enjoy. Even if current income doesn’t stretch far enough to satisfy all of your future financial objectives, the needs analysis process will help you establish and focus on your priorities.
Your insurance professional can guide you through this comprehensive analysis to identify your goals and to show you how life insurance can help to meet each of your objectives. By initiating a plan of action, you can create an estate that will provide financial assets should you no longer be able to do so yourself.
Members of the military have a lot of special financial challenges that most people don't encounter. However, they have access to many benefits, tax breaks and legal protections that can make a huge difference in their families' personal finances. My husband was an Army doctor for 21 years and was deployed three times; many of these resources and benefits helped our family a lot over the years.
Here are ten of the top financial benefits available to service members and how to make the most of them to improve your family's financial future.
Service members have access to one of the lowest-cost retirement savings plans around. The Thrift Savings Plan (TSP) charges an annual expense ratio of just 0.038% of assets - whereas annual fees and expenses for 401(k) plans range, on average, between 1% and 2%.
The TSP lets you choose one of five index mutual funds or a target-date fund, which automatically becomes more conservative as your retirement date gets closer. You can invest up to $18,000 annually in the TSP in 2017, and if you're receiving tax-free income while deployed you can boost your contributions to $54,000 for the year. And now you have access to a Roth TSP, too, which is like a
Roth IRA but without the income restrictions. See www.tsp.gov for details.
The military's Savings Deposit Program (SDP) allows deployed service members to invest up to $10,000 in the program each time they deploy. You receive 10% annual interest, compounded quarterly; the program lasts for up to three months after your return.
Your take-home pay increases while you're receiving tax-free income during deployment, which can help you afford to stash extra money in the SDP. For more information, see the Savings Deposit Program page at the Defense Finance and Accounting Services
web site.
For most people, contributions to a Roth IRA are not shielded from taxes. But for service members receiving tax-free combat-zone pay, your money goes into the Roth tax-free, and your contributions as well as your earnings come out tax-free, a double tax benefit that's tough to beat.
You can contribute up to $5,500 to a Roth in 2017 if your income doesn't exceed certain limits. If your spouse doesn't work, you can contribute up to the maximum on his or her behalf, too.
The Post-9/11 GI Bill covers the full cost of in-state tuition and fees at public colleges for up to 36 months (four academic years), or up to $21,970 per year for private colleges and foreign schools. You'll also get a housing stipend and money for books and tutoring.
The money may be used for undergraduate or graduate programs, or for certain programs at vocational and trade schools. And one of the best features of the Post 9/11 GI Bill is that longtime service members may transfer their benefits to a spouse or children. Get more details on the Post-9/11 GI Bill at the Department of Veterans Affairs website.
Service members have access to one of the lowest-cost life insurance programs available. Service members' Group Life Insurance costs only 7 cents per $1,000 of coverage per month, or $336 a year for the maximum $400,000 -- regardless of your age, health or likelihood of being deployed. (The lowest rate that a healthy 40-year-old man could get for a private $500,000, 20-year term insurance policy would range from $350 to $450.)
Service members can also get $100,000 in coverage for a spouse for as little as $60 a year if he or she is under age 35 (more for older spouses). See the Department of Veterans Affairs site for more information.
The law allows service members to maintain legal residence in one state even if they are stationed in another. So if your legal residence (also called domicile) is a state that has no income tax, you can be shielded from taxes if you move to another state while on active duty.
A spouse who has the same domicile as a service member can also maintain that legal residency if the couple moves to a new state under military orders.
The Service Members Civil Relief Act provides special legal benefits for service members, including an interest-rate cap of 6% on any loans you took out before you were called to active duty. This cap is especially helpful for members of the Reserves who are called to active duty and have to take a pay cut when they leave their regular jobs.
You have to apply to the lender for this benefit, which is intended to help you if your ability to pay is affected by military service. The law also gives you the right to terminate an apartment lease if you have orders for a permanent change of station or are deployed to a new location for 90 days or more. The Armed Forces Legal Assistance Office can help with these requests.
Members of the military have access to Veterans Administration loans, which are now one of the only ways to get a house with no money down (and no private mortgage insurance). See the Veterans Administration site for more information. However, if you put little or no money down, you could end up being upside down on your home if prices drop and you have to move.
For help dealing with underwater homes, see Fannie Mae's advice at the KnowYourOptions.com Military Options page, the government's Home Affordable Foreclosure Alternatives (HAFA) program.
Another big perk for service members is the tax-free housing allowance, a monthly subsidy covering all or part of your monthly rent or mortgage payment as long as you're in the military.To see the value of the subsidy (which varies by your rank, where you live and whether you have dependents), check your Leave and Earnings Statement (your military pay stub) for your Basic Allowance for Housing and other special benefits, or look it up by rank and zip code at the Department of Defense's BAH calculator.
Each branch of the military has an emergency-relief fund that offers small, interest-free loans for emergencies. Contact the community-service office at your base for details, or visit Army Emergency Relief, Navy-Marine Corps Relief Society, Air Force Aid Society or Coast Guard Mutual Assistance. Credit unions on base also offer short-term loans at reasonable interest rates. Some even offer small emergency loans to members of the military with little or no credit check.