Washington Informer

When it comes to financial independence, it often seems that there are certain members of society who just have a better chance of succeeding than everyone else. In fact, there is a anecdote that makes the rounds every so often that claims if you take a group of millionaires; remove all of their knowledge, wealth, and experience; and stick them in the middle of a desert with nothing but a gallon of water, almost every single one of them will be back to millionaire status within 10 years. While it is hardly ethical or scientific to actually put this theory to a test, the basic premise is pretty reasonable: the wealthy are wealthy because finances, investments, and making money are what they're good at doing.

Financial Independence: Your Goals, Your Life

While it may not be your life goal to become a millionaire, it would be difficult to convince anyone that being financially independent or comfortably wealthy wouldn't be a nice break from the routine of everyday life. Yet few people really take advantage of what they currently have to try and amass the kind of wealth that will allow them an early retirement or that beach house in the Grand Caymans.

The primary culprit? Not having solid, attainable fiscal goals.

This may seem oversimplified at first, but the fact is, most people view financial investments or long-term financial planning as something that can wait or that can be set aside when everyday life gets in the way.

The best financial advisors and investment firms, however, will tell you that the first thing you can do to start making the kinds of decisions that will create a solid portfolio of wealth for the future is to sit down and really outline what it is you want and what steps you can take to get there.

For example, imagine a family whose three children are only a year apart in age. They're young right now, but the parents one day hope to see all of them in the college of their dreams. There are a number of steps that need be taken to make that goal a reality, and not all of them have to do with stepping up the piano lessons or moving to a neighborhood with the best public schools. In order to reasonably put three kids through college, it is best to create a financial plan with actual, numerical results at the end. Saving whatever is left at the end of the month is a good first step, but unless you sit down and look at what kinds of investments that money needs to go into to get the necessary percentage increase in 15 years, you aren't following a financial plan – you're just saving money.

The Bottom Line

Understanding that difference – the difference between saving money and following a financial plan – is what really separates the millionaires from the rest of the population.

The good news is, in today's world, you don't have to have the know-how yourself to move from saving to creating an investment plan. Thanks to financial advisors and other professional firms dedicated to turning fiscal dreams into realities, everyone can tap into the knowledge it takes to move – if not quite to millionaire status – as close as necessary to live the life you deserve.

When we initiate estate planning, most of the focus is on the financial aspect of your legacy. Your will, trusts, and other bequests usually focus on who gets what, how much of it they get, and what they're allowed to do with it.

While money is an important part of estate planning – is, in fact, the primary reason for undertaking it in the first place – there's also another facet to consider. It has less to do with where your money goes and more to do with how you want to be remembered for decades to come.

What is a Legacy?

From a legal and financial standpoint, a legacy is any gift of personal property that gets passed along after your death. However, most of us also view a legacy as a gift of less material means. A legacy can be personal treasures that you place high in value but which have no actual monetary value. A legacy can be the message you leave regarding how you want your children to be raised, the plan you lay out for yourself in the event of a loss of mental faculty (as in a living will), or even the way in which you want your remains to be taken care of. In short, a legacy is the way you want your life – and the fruits of your labor – to be remembered.

Leaving a Financial Legacy

In many ways, a legacy can be both financial and emotional. For example, suppose you've amassed quite a fortune, but you don't want all of it to go to your children or grandchildren. You can choose a charity to be the recipient of your wealth or give it all to your church. You can start your own scholarship program. You might even leave it to a loved one in a trust – provided they act in accordance with a set of values and stipulations you set out in advance.

In order to honor your values during the estate planning process, it's important to work with an estate planner who embraces the emotional aspect of your legacy. Incorporating your family in the process should be a welcomed idea, since many of your decisions ultimately affect them. You should also be able to get as creative or as traditional as you wish to be. After all, estate planning is no longer tied to the legal process in the way it was in years past. You have more freedom in your choices, allowing you to leave a message to your loved ones that you may have been unable to put into words during your lifetime.

No matter how much distance you place between yourself and your finances, estate planning and leaving a legacy are one and the same thing. Long after the money is spent, your family members or the beneficiaries of your estate are likely to remember the loving ways in which you shared who you are and what you did during your lifetime. That's what leaving a legacy is really all about.

Questions? Email me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it and visit our website at www.thewandwgroup.com. New Money Talk is a weekly article focusing on retirement, personal finance, and estate planning.

Comments and questions are welcome, but because of the volume of email, personal responses are not always possible.

Finances and budgeting are almost never taught in today's educational system. Although our kids learn advanced algebra and the history of economics, they rarely get the practice they need learn how to make a budget, stick to it, and start saving money as soon as they land their first job. Add to this the practice of credit card companies in targeting 18 year-olds and other college-bound youth, and the result is a potentially dangerous combination of irresponsibility and mounting debt.

This means that it is the job of parents – and the finance industry – to make teens responsible about money. And while it might seem difficult to teach fiscal responsibility to a generation known for acting first and thinking later, responsible money management is one of the most important lessons you will ever teach your kids.

What to Teach Your Teens about Money

The most important thing teenagers – and adults – need to learn about money is that it is important to set goals. Telling your teen that he or she needs to take 10 percent out of every babysitting paycheck and put it in a savings account only teaches them that they need to listen to Mom or Dad. Urging them to save $1000 to invest in mutual funds along with your own investments allows them to visualize a goal and calculate what sort of returns they can expect later on down the road.

Seeing those numbers written down on paper can go a long way in solidifying a teen's understanding of finances. After all, safely invested money looks much like free money after awhile, and when your teen combines this type of goal with the goal of a large purchase he or she wants to make – say, a down payment on a car – he or she will have double the incentive to save.

Learning to Budget Early

Most teens should also learn the value of budgeting. In today's society, the general urge for teens is to buy first, and ask questions later – and Mom and Dad will take care of the rest. Whether a purchase is made on a credit card or at the expense of this month's gas money, many teens are later "bailed out" by parents who don't want to see their kids racking up bad credit scores.

While protecting your child from a lifetime of bad credit is admirable, you're often better off letting them learn from their mistakes. Have your teenager make a budget and stick to it. If he or she goes over, resist the urge to provide the funds they need to get by and force your teen to skip out on movies or new clothes until the budget is balanced. After all, learning about not overspending now – before your kids live on their own and the real danger of debt becomes a threat – can actually help teens in the long run.

No matter what happens, make sure you discuss finances with your teen openly and honestly. Allow teens to make mistakes, but require them to evaluate and learn from those mistakes. After all, fiscal responsibility is something than even many adult struggle with, and you'll help your kids the most by starting financial planning early.

s

Finances and budgeting are almost never taught in today's educational system. Although our kids learn advanced algebra and the history of economics, they rarely get the practice they need learn how to make a budget, stick to it, and start saving money as soon as they land their first job. Add to this the practice of credit card companies in targeting 18 year-olds and other college-bound youth, and the result is a potentially dangerous combination of irresponsibility and mounting debt.

This means that it is the job of parents – and the finance industry – to make teens responsible about money. And while it might seem difficult to teach fiscal responsibility to a generation known for acting first and thinking later, responsible money management is one of the most important lessons you will ever teach your kids.

What to Teach Your Teens about Money

The most important thing teenagers – and adults – need to learn about money is that it is important to set goals. Telling your teen that he or she needs to take 10 percent out of every babysitting paycheck and put it in a savings account only teaches them that they need to listen to Mom or Dad. Urging them to save $1000 to invest in mutual funds along with your own investments allows them to visualize a goal and calculate what sort of returns they can expect later on down the road.

Seeing those numbers written down on paper can go a long way in solidifying a teen's understanding of finances. After all, safely invested money looks much like free money after awhile, and when your teen combines this type of goal with the goal of a large purchase he or she wants to make – say, a down payment on a car – he or she will have double the incentive to save.

Learning to Budget Early

Most teens should also learn the value of budgeting. In today's society, the general urge for teens is to buy first, and ask questions later – and Mom and Dad will take care of the rest. Whether a purchase is made on a credit card or at the expense of this month's gas money, many teens are later "bailed out" by parents who don't want to see their kids racking up bad credit scores.

While protecting your child from a lifetime of bad credit is admirable, you're often better off letting them learn from their mistakes. Have your teenager make a budget and stick to it. If he or she goes over, resist the urge to provide the funds they need to get by and force your teen to skip out on movies or new clothes until the budget is balanced. After all, learning about not overspending now – before your kids live on their own and the real danger of debt becomes a threat – can actually help teens in the long run.

No matter what happens, make sure you discuss finances with your teen openly and honestly. Allow teens to make mistakes, but require them to evaluate and learn from those mistakes. After all, fiscal responsibility is something than even many adult struggle with, and you'll help your kids the most by starting financial planning early.

In order to fall under the umbrella of the "financially responsible," most people know they need to start financial planning early, keep a diversified portfolio, and stave off debt. However, despite best intentions, these goals are not always easily accomplished. In most cases, the culprit is simply life getting in the way. Car repairs, home improvements, and unexpected job losses all seem to come together to put a kink in even the most well-laid financial plans.

To keep yourself closer to the financial finish line, there are a few common financial pitfalls you can avoid. Although you may fall short of the goal from time to time, knowing where you stand and where you are poised to land are incredibly valuable in being financially sound for the long term.

Thinking It Is Too Late

The best financial advice taps into individuals in their twenties, when there is little debt, few obligations, and a high potential of earnings. Unfortunately, few of us are ever the financially responsible adults we want to be straight out of college. It's important to remember that no matter where you are on your financial journey – one of the lucky few in their twenties or one of the more common forty-somethings realizing that their savings account just isn't what it used to be – it is never too late to get started saving for retirement or even for a down payment on a home. Doing nothing is the only way to guarantee that you'll have nothing.

Thinking You Have More Time

On the flip side of the coin, you must also do everything in your power to get started investing right away. Although no one is going to berate you for failing to start saving twenty years ago, it doesn't do any good to wait another twenty to get started. It doesn't matter if you have thousands of dollars in debt or are switching jobs for the sixth time in as many years. Meet with a financial advisor right now to learn what your next steps should be.

Not Looking Far Enough Ahead

Some beginners make the mistake of investing money only to realize a few years later that those funds are needed somewhere else. Consider the time frame of each and every investment you make. Few advisors will recommend touching money in the stock market before five years is up, but a money market account or certificates of deposit can turn around quicker than that. You'll also need to remember that most investments do much, much better if they are left alone. Trading in and out of the market or changing your mind frequently can comes with fee or other monetary setbacks. Like a good wine, investments tend to get better with age.

Questions? Email me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it and visit our website at http://www.thewandwgroup.com. New Money Talk is a weekly article focusing on retirement, personal finance, and estate planning.

Comments and questions are welcome, but because of the volume of email, personal responses are not always possible.

Divorce and its financial challenges are an issue almost no woman wants to face. After all, during divorce proceedings, not only is a woman considering the financial future of herself and her family, but she's also dealing with the emotional aftermath of the dissolution of a marriage. It can be a difficult time for everyone involved, and a messy financial situation will only make things worse.

Unfortunately, no matter how mutual or cut-and-dry the legal proceedings of a divorce are, there are complications when it comes to short-term and long-term finances. The best thing women can do to prepare themselves is to take financial issues one step at a time, working with an advisor they trust to help them start looking ahead to a brighter future.

After Divorce: The First Steps

Once everything has been divided up, it is necessary to re-title or transfer all of the "big ticket" items, including property, houses, cars, wills, insurance, credit cards, and bank accounts. It's important to get these things out of the way first, since you don't want to be held liable for any delinquent payments or unaccounted spending on behalf of your ex-spouse. The same is true for any issues related to bankruptcy; if there is a chance of either partner filing, it's important to do it either before the divorce occurs or very soon thereafter. That's because it is possible for one ex-spouse's bankruptcy to affect the other's financial situation, since he or she may be held liable for defaulted loans.

Along these same lines, it's important to amend existing retirement plans, including IRAs and 401(k) accounts. When possible, these should be a part of the divorce settlement, since they incorporate a very large portion (if not all) of your financial future as far as retirement goes.

After Divorce: Looking Ahead

Getting your finances settled after a divorce can take years. Not only are most women adjusting to a new home and new income, but many of them are also figuring out how to balance work and child care, as well. This means that you may not consider yourself ready to start planning a savings and retirement plan until five or ten years have gone by and you are on your feet, so to speak.

This is a mistake. Although you might not have the funds ready to start investing right away, it's always best to at least meet with a financial advisor who can help you determine your goals and next steps. Whether you want to set a retirement plan into action or find a way to build a savings account that will give you – and your newly emerged family – some freedom from financial worries, it's always best to start right away.

Although there are rarely very many silver linings to a divorce, it does give many women a chance to start taking proactive control over their future. Sure, it may take a few years before you start to feel settled enough to really tackle stocks, bonds, risk assessments, and portfolio diversification, but divorced women are among those best suited for smart financial decisions – if only because they're being forced to ask the hard questions and take a good look at what they want out of their lives.

Questions? Email me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it and visit our website at http://www.thewandwgroup.com. New Money Talk is a weekly article focusing on retirement, personal finance, and estate planning.

Comments and questions are welcome, but because of the volume of email, personal responses are not always possible.

When choosing to invest your money, you want to invest wisely. Unlike saving money, which occurs when you put money away to grow while protecting your initial principle, investing money involves a certain amount of risk to your initial principle in order to generate a return on investment.

Unfortunately, no investment is without risk. A basic rule on investing is "the higher the risk, the higher the potential return." The risk in investment can vary depending on the opportunity and how comfortable an investor is with the risk. And while risk can be a good thing, there are times when you should be wary of the options being presented to you.

In today's financial world, greed is a driving factor for making bad investment decisions. All too often, the idea of quick and easy money is a siren song for the average investor, especially when it seems that everyone around you is cashing in. Of course, investment fads can and have made people money. For example, the dot-com boom of the 1990s certainly made its share of millionaires. However, it's important to remember that more people lost money in the subsequent dot-com bust.

How can you tell if an investment opportunity is a fad? Consider the following traits:

Changing Rules - When the dot-com boom hit in the late 1990s, it was touted as "the new economy," and many people said that it would change economics. It did not and instead went bust, along with many investors' hopes and dreams. Whenever an investment is said to be changing the rules, it is most likely an exaggeration. This means that other aspects of the investment might be exaggerated, as well.

Biggest Thing - If everyone and their grandmother is talking about what a "sure thing" a particular investment opportunity is, do not take their word for it. Where to invest your money is a serious decision and there is no such thing as a "sure thing" in the investment world. Otherwise, everyone would be millionaires.

Experts Disagree - When in doubt, listen to established investment experts. If established experts in the field are not jumping on board with a new investment idea, there is probably a reason. They know the industry better than anyone else, and if they aren't behind an investment opportunity, it's probably not a valid one.

If you think that the investment opportunity that you have found may be a fad, be cautious. All too often, investors can be dazzled by the promises of easy investments with huge returns either instantaneously or within a very short time frame. Be wary of investment opportunities that promise a huge return with little risk over a short period of time. As the saying goes, "If it seems too good to be true, it probably is."

If you are still unsure on whether or not an investment opportunity is a fad, consult an expert on the issue, such as your financial advisor. Your financial advisor can help you make balanced, strategic decisions about your investment portfolio and help you to avoid the pitfalls of investment fads.

Questions? Email me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it and visit our website at http://www.thewandwgroup.com. New Money Talk is a weekly article focusing on retirement, personal finance, and estate planning.

Comments and questions are welcome, but because of the volume of email, personal responses are not always possible.

If you don't know how much you are saving or when you will be able to retire, it's time to look at the benefits of setting financial goals. It's important to look at what your future plans are, how much you can contribute to them, and how you plan to manage and grow your wealth. By working with a financial advisor to formulate a plan, you can be secure in the knowledge that your investments are growing appropriately and that you will be able to retire comfortably when you are ready.

Financial Goals in a Tough Economy

The economy is tough right now, and many people are cutting back on their savings and investments. At the same time, with stock prices dropping, many stocks and funds can be had for a very low cost. While no one can guarantee that they will rise in price, a qualified financial advisor can help you to determine you best bets. No matter how much cash you can spare these days, there are investments that you can make that will put your future in good stead. The benefits of setting financial goals don't have to go by the wayside when times are tough. Now, more than ever, you need to stick to your plan.

Visualizing the Financial Future

Now that we are discussing money, what are your goals? Do you want to retire in ten years? Do you have kids to put through college? Do you want to keep working but have the funds to take extensive vacations? No matter what financial goals you have, they take money, and for most of us, that means planning. One of the benefits of setting financial goals is knowing how much to set aside and how to grow it to meet your these goals. Planning how you see your future, however, is the first step.

Another important benefit of setting financial goals is that you get to reevaluate them. As time goes on your needs may change. You may love your job and not want to retire. Your daughter may have a full ride scholarship, and you won't have to pay for college. Your parents may need extra assistance in their golden years that you hadn't counted on. Life is always changing, and your financial plan should be flexible, as well.

Reassessing your goals means reassessing your investments, too. Riskier investments can pay off if you have a long time to grow a return, for example, but if you need a steady, reliable source of income, they may not be the best option. By reassessing your investments along with your goals you can make sure you are on the right track.

Moving Forward to Financial Success

There are many benefits to setting financial goals. You can plan for your future and ensure you'll have the security to retire when you want to. You can also reassess your goals and investments to make sure the plan for each is still what you need.

Along the way, it might be best to get some help from a qualified financial advisor to know for certain that you've made the best investments you can for your wealth. Life changes, and so should your plan—but if you account for this, you can make your goals work for you.

Questions? Email me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it and visit our website at http://www.thewandwgroup.com. New Money Talk is a weekly article focusing on retirement, personal finance, and estate planning.

Comments and questions are welcome, but because of the volume of email, personal responses are not always possible.

Taking control of your investments has never been easier, but there are some online investment frauds you should know about. There's a wealth of information online about stocks, companies, and their investment potential. Finding which information is worth paying attention to and which information is deceptive, however, can be tricky.

Frauds to Look Out For

One common investment fraud is when a site or emailed newsletter recommends hot stock picks that aren't actually hot—it's really just in someone else's best interests to get the stock sold. While not even true experts can promise a return on an investment, these recommendations aren't usually even smart picks. Many online newsletters will accept payments to tout certain stocks over others, and your portfolio may pay the real price for the misinformation. What complicates this issue is that there are legitimate newsletters offering expert picks on stocks, but weeding through all of the information can be time consuming. It's a good idea to check with your financial planner to see if there are sites or newsletters that he or she recommends.

Another common online investment fraud occurs on bulletin boards. If you are scoping the Internet for leads on good investments, you may come across sites where people are talking up a company or its assets. While it can be exciting to get in early on a good thing, these leads are usually false. People sometimes band together to spam a bulletin board and chat about a certain opportunity. It may look like a variety of people are recommending the prospect, when in reality this is a planned attack of misinformation geared to lure you into investing poorly. The opportunity, in all likelihood, is not the next big thing, even though the unscrupulous people behind the push to sell it want you to think it is.

How to Protect Yourself from Online Investment Frauds

• Learn how to acquire and analyze financial data. Public records can give you important data about the solvency and future of a company, and being able to review it puts you ahead of the pack.

• Check the stock history of the company and of other businesses the CEOs have run. Did those companies also make money? This can't tell you what the current company will do, but good management practices can make or break a business.

• Find a broker or financial expert to discuss stock choices with. With modern technology, you can choose how active you wish the expert to be in your portfolio, but the expert's goal is to make you money, especially since many of them make a percentage of your earnings.

And as the adage goes, if it sounds too good to be true, it probably is. Look into potential investments with care, and ask the experts if you need to. Online investment frauds are out there, but with a bit of research and some healthy skepticism, you can make the most of your investments and your time.

Questions? Email me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it and visit our website at http://www.thewandwgroup.com. New Money Talk is a weekly article focusing on retirement, personal finance, and estate planning.

Comments and questions are welcome, but because of the volume of email, personal responses are not always possible.

For most investors, choosing an investment strategy is based mainly on which investments will give you the best return. This makes smart sense; after all, your goal is to make money.

However, many of today's investors have become increasingly more conscious and concerned with how their investment money is being utilized, and some investors are choosing a broader scope of investment. In addition to building wealth, more investors are turning to socially responsible investing to ensure that their investments are financially, morally, and ethically sound.

What is Socially Responsible Investing?

While the goal of any type of investment is to generate a return for the investor, socially responsible investing looks at more than just the return potential when deciding where to invest – it also factors in a company's social impact. Socially responsible investing (SRI) may take into consideration factors like a company's governance, environmental and/or social policies, political involvement, etc. Socially responsible investing has also been called mission investing, double or triple bottom line investing, ethical investing, sustainable investing, or green investing.

Socially responsible investing currently accounts for an estimated $2.71 trillion out of the $25.1 trillion U.S. investment marketplace, according to the Social Investment Forum.

What is Involved in Socially Responsible Investing?

When researching socially responsible investment opportunities, investors may take one or more of the following approaches:

Screening

Investors evaluate opportunities based on social, environmental, and governance criteria. These screens can be positive or negative. Socially responsible investors are generally looking for companies that are both good financial performers that make positive social contributions. Conversely, these investors also tend to avoid companies that are known as being known polluters or otherwise not known for being sensitive to social issues.

Shareholder Advocacy

Socially responsible investors take an active role in the companies in which they have a stake. Their efforts can include having dialogues with corporations and bringing awareness about issues such as governance, labor practices, discrimination, and more. Socially responsible shareholders may also take a step further and file shareholder resolutions that not only create investor pressure, but can also create media attention, helping to educate the general public about the corporation and their position about the issue at hand.

Community Investing

Traditional financial service institutions underserve many types of communities. Corporation-sponsored community investing directs capital from investors to give these underprivileged communities access to traditional banking products as well as credit, capital, and equity to build their community and provide community services including housing, child care, and health services. This is the fastest growing area of SRI, having grown a staggering 540 percent over the last decade.

At the end of the day, socially responsible investing is all about finding ways to make money and make a positive impact on the world doing it. It requires a little more effort in terms of finding and researching investments, but being morally and ethically smart with your money is a good way to really enjoy your wealth and give back to communities and industries in need.

Questions? Email me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it and visit our website at http://www.thewandwgroup.com. New Money Talk is a weekly article focusing on retirement, personal finance, and estate planning.

Comments and questions are welcome, but because of the volume of email, personal responses are not always possible.