Washington Informer

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.

Your financial health should be assessed the same way your physical health is: annually. Keeping your finger on the pulse of your financial well-being allows you to reach the financial goals you have set, and can also provide opportunities for you to save even more money.

An annual financial review is basically a way to ensure that your finances stay on track. The elements covered below are helpful considerations for an annual financial review; however, it is also best to consult with a financial advisor who can assess your particular situation and needs, and guide you appropriately.

Assess and Revise Progress Toward Financial Goals

Have you met any of the goals you set for yourself last year? Have you had a life change that requires your goals to be revised and changed to better suit your new circumstances?

Update Changes to Your Personal Financial Situation

Increases as well as decreases in income and expenditures need to be updated. Are you anticipating a life change that will require a new set of goals, or a new budget? Buying a home, welcoming a new baby, or making a major purchase like a car all could affect various aspects of your finances.

Evaluate Your Insurance Coverage

Review the coverage you have for homeowner's or renters, auto, life, health, and long-term disability insurance. Does the coverage you currently have allow your family and loved ones the comfort and protection they would need should a situation require it? Is it possible that you are paying for more protection than you need?

Expect the Unexpected

Read over your will, or, if you haven't created one, do so now. Make any changes necessary to reflect your wishes, or include new members of your family.

Consider Your Retirement Plan and Investments

Are you on track to contribute the maximum to your 401(k), if available? If not, have you set up an IRA on your own, or considered other options to help you save for retirement? Have you calculated the return on your mutual funds, stocks, or bonds, and are you satisfied with their performance?

Aim to Minimize Taxes

Have you updated your withholding allowances to make sure you are not overpaying the government? Meeting with a financial advisor to discuss ways to maximize your deductions is a means to reduce your tax burden.

Review Your Debt

Create a plan to pay down or eliminate all of your debt. Should you consider refinancing a mortgage? Have you reviewed your annual credit reports?

Considering these elements of an annual financial review will help you keep tabs on your financial well-being. For additional support, consider accessing a financial advisor who can work one-on-one with you to analyze the different aspects of your finances and assist in creating the best financial plan for your entire family.

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.

Whether you are in twenties and wondering how best to make your money work for you or in your forties and desirous of ensuring your retirement is safe, it's never too late to begin investing. Before you jump into the stock market with a "sure thing" tip from your neighbor, however, be sure to do your research and understand what you can realistically expect from your first year of investing.

Finding Support for Your Financial Plans

Consulting a financial planner and creating a financial plan is crucial to investment success. A qualified financial planner will help you determine whether or not you are in a position to invest.

If you are not yet in a position to invest, a planner can help you create a plan to pay down any debt you may have and eventually save money to invest at a later date. Once you have saved the money to invest, a financial planner can help you evaluate investment opportunities and create an investment plan turned for

Learning the Ropes

Risk: "Without risk, there is no reward." All investments carry some risk, but a greater risk does not always mean a greater reward. While no one ever wants to lose money, you'll never invest money that you cannot afford to lose. You will learn right away how an investment might go down (or up) only to reverse in the other direction a few months later.

Finding Your Niche: In your first year of investing, it is important to remember that you are still learning how to invest. While it may be exciting to find up-and-coming investment opportunities, it may be wise to stick with companies that are proven performers instead. You'll soon discover where you are the most comfortable placing your money and why.

Importance of Diversification: When planning your investments, you will always be told to diversify. Putting all of your money in any one industry or product can spell disaster for your portfolio if that industry were to take a loss. Diversifying your portfolio will help strengthen your portfolio against ups and downs in the market. And while diversifying also includes putting some money in long-term investments and others in short-term, you should learn to be wary and to do your research before investing. Investment opportunities that promise high rewards in a short time are often investment fads and are more likely to lose money rather than make money.

A Lifetime of Learning

Once you start investing, it is up to you to continue to learn more about the market. Learn about other investment opportunities, evaluate them, and figure out whether they are right for you. Monitor your investments with your financial planner to ensure that your investments are continuing to help you meet the goals that you set for yourself. While a financial planner is your partner in the process, it is ultimately up to you to make the final decisions.

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.

A longing to spend the day on the golf course or the urge to pack up all your belongings and move into an RV are telltale signs that you're emotionally ready for retirement. Unfortunately, a person's desire to retire isn't always aligned with his or her retirement plan; unless you've got the financial backing you need to quit the rat race for good, an early retirement might actually end up being one of the worst fiscal decisions of your life.

While retirement is a partially subjective issue, since you're the only one who can determine for certain if the timing is right to quit your job and cash in your 401(k), there are certain financial indications that indicate if retirement is the best course of action for you and your life.

Are Your Finances Guaranteed?

One of the best ways to tackle retirement is to adjust yourself to a steady monthly income that will come in no matter what might be going on around you. A fully-vested pension or 401(k) plan or a set annuity are good indications that you can retire without fear of losing all your money, since you will know what to expect each month. On the other hand, investments that are dependent on the market continuing an upward climb before you cash them in are less stable, and give you fewer options is something does take a turn for the worse.

An important note here is that counting on Social Security to fill in the gaps isn't always an ideal plan, either. While Social Security can be a great way to channel some extra funds into investments, depending on it to pay the bills means that you might need a few more working years before you let go.

Can You Access Your Money Anytime?

Many types of investments limit your accessibility to your funds. Stocks and bonds typically require a certain amount of time to mature properly, and there might be a large fee associated with taking the money early. If the bulk of your retirement money is tied up in these kinds of investments, it might be wiser to wait until they have reached their peak before you access them.

This is especially true in a declining market like the one the United States is experiencing right now. Not waiting out a recession can end up costing you thousands to millions of dollars – certainly not enough to offset taking retirement a few years early.

Before You Retire

No matter how prepared you think you are, it's always best to confer with your financial advisor before making your retirement official. With your advisor's help, you should be able to set the benefits of retirement against the financial risks – allowing you to make the decision to retire a logical as well as emotional one.

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.

Financial planning in your 50s is all about enjoying what you have and looking forward to an even better few decades to come. If you are in your 50s, you are hopefully looking forward to soon reaping the goals of your hard work of investing and saving money. However, if you don't have quite the portfolio you'd always dreamed of having at this point, there's no need to panic just yet. With some smart (and possibly even higher-risk) ventures, you can get back on track and still enjoy the life you've spent so many years building.

Here are some common financial planning concerns for people in their 50s and how to address them:

Retirement planning - By now, you've hopefully been regularly contributing to a 401(k) or an IRA plan for a few decades. As you get closer to retirement age—or if you plan on retiring early—you will want to take a look at living expenses. Take a long, realistic look at the lifestyle you will want to live once you retire and estimate what your expenses are going to look like.

Once you have that estimate, it's time to determine what your accounts will be worth when you retire. There are calculators on the Internet that can help you with these figures, or you can contact your financial planner to give you a more accurate number.

By taking into account any income you are likely to receive during retirement (social security, pension, etc.) as well as your savings, you can now accurately predict whether or not you will meet your goal or fall short.

This would be a good time to review your portfolio. Are you being too aggressive or too conservative in some of your portfolio choices? While these types of oversights might have been okay ten years ago, errors now can have a much more immediate impact .Consult with your financial advisor about any concerns you may have and make any allocation changes you decide are necessary to help ensure a safe, comfortable retirement.

Estate planning - While no one wants to think about their final expenses, finding a financial advisor who can help you with estate planning will help give you peace of mind. Estate planning ensures that your estate is handled in a manner that you approve of and that your children are not burdened with making your final financial decisions after your passing.

Consult a lawyer or an estate planner to help with this portion of your financial future. At the very least, an estate plan should include a will as well as a durable power of attorney. A power of attorney gives a designated person the right to make financial decisions on your behalf if you become unable to do so.

Your estate plan should also include a living will, which will notify people of your wishes regarding medical care in case you become ill or seriously injured and are unable to make decisions yourself.

Of course, one of the best things about financial planning in your 50s is enjoying the money you have (either through earning or a few years of saving). While financial responsibility is in your best interest, you can also afford to spend a little on the types of purchases that will add quality to the life you have.

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.

A business begins with a great idea that will provide a product or a service to a community. Although every great idea deserves to be explored, not everyone has the same opportunity to develop his or her business ventures. Even though minorities currently make up 33 percent of our population, minorities own only 18 percent of the 23 million U.S. firms. In an effort to balance these figures, some lending institutions and loan programs have special programs in place to provide grants and loans to minority-owned businesses.

Loans for Minorities

Accion USA: Accion is a microfinance organization specializing in small business loans that serve minority populations. Loans range in amount from $500 to $50,000, have terms up to 60 months, and offer fixed annual interest rates from 8 to 15 percent.

Basic 7(a) loan program: The Small Business Administration (SBA) backs this loan program for existing and start-up small businesses to provide an avenue to receive financing when others are not available. 7(a) loans are the most flexible and most commonly used type of small business loan. Because the loans are provided by a lender, but guaranteed in part by the SBA, borrowers must meet the requirements of both the lender and the SBA.

The Microloan Program: This program provides short-term loans to small businesses through intermediary lenders, typically nonprofit community-based organizations. Six years is the maximum term for these loans, and $35,000 is the maximum amount. Interest rates depend on the lender, but are generally 8 to 13 percent.

CDC/504 loan program: This program is designed to provide funding for "brick and mortar" projects, purchasing land, buying existing buildings, modernizing, and purchasing machinery equipment. A Certified Development Company (CDC), a private, nonprofit corporation, works with the SBA and private lenders to provide financing.

Grants for Minorities

Grants are not provided by federal agencies for small businesses; however, some states offer small business grants to encourage small businesses in the local area. Check with your state's economic development agency, and your local non-profit organizations to see if there is anything available in your area.

Additional resources are available to open doors for minority owned businesses. Minority Business Development Centers (MBDC) offer training, one-on-one help, and other links to services and information that aid minority businesses. There are currently five regional offices. To find more information, visit their website at www.mbda.gov.

The Small Business Administration, along with many lenders, are encouraging minority owned businesses to apply for financing and increase their presence in the business world. Discussing your options with a financial advisor is a good idea to help you determine which programs may benefit 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.

When investing your money, it's important to take risk versus reward into account. Like so many other areas of life, the risky path has the most potential for a big payoff, but the safe route is all but guaranteed to earn you at least a little something. Knowing your personal risk tolerance level and using this in conjunction with where you are in meeting your financial goals will help you determine the best way to balance your investments.

Smart Investing Means Knowing Yourself

What is your personal tolerance for risk? Would you rather hope for the big payoff and possibly lose money in the meantime, or would you prefer to invest your money in solid accounts with a small rate of return? While no investments are guaranteed, the small accounts can provide you with a fairly reliable return over time. All the same, riskier investments become significantly less risky, statistically, over years, often leading to great returns. After a year of dwindling accounts, it's hard to be confident that riskier investing can be worth it, but if you have enough time left before retirement, playing risk versus reward may be a great bet.

Smart Investing Means Knowing Your Long-Term Goals

If you are almost ready to retire, it's probably safest to keep most of your wealth in medium- to low-risk investments. While these types of investments don't have the same return potential as high-risk ones, they also aren't likely to leave you with less money than you started with. When you look at it like that, it may sound strange to recommend riskier investing to anyone. How can high-risk investing possibly beat the odds?

Try to think of risk versus reward this way: if you invest in a high-risk fund, the value may go up or down. When it's up, you are making money, which you can put back into the investment or invest elsewhere. When it goes down, you may be losing some money on the fund, but you can buy more shares at a decreased rate at this time, giving you higher earning potential in the future. When examined over the span of many years, the higher risk options often provide a greater rate of return than less risky investments. If you have many years before you retire, this may be a great method to build your wealth.

No matter what your feelings are towards risk vs reward, you should seek the help of a financial advisor. These professionals can help you determine both what your personal feelings are toward risk, as well as how to best meet your financial goals. Investments that may seem too risky on the surface may have better returns over time, and seeking the help of a financial planner is the best way to know what the right choices are for you. Maximizing your wealth with the right mix of risk is critical, and with proper research and guidance, you can make it happen.

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 worry about money, you are not alone nearly as alone as you think you are. A recent financial poll demonstrated that two-thirds of respondents felt anxious about their long-term financial situation, yet less than half of that actually seek formal help in making changes to their bottom line.

Fortunately, getting help isn't nearly as difficult – or as expensive – as you might think. Whether you make only a little bit of money and are worried about making ends meet, or you have a six-figure salary and are wondering how to make your money work for you, you can benefit from financial planning.

What is Financial Planning?

Financial planning is the process of meeting your life goals by properly managing your finances. It can be done by yourself or in conjunction with an investment professional. The basic steps to creating a financial plan include:

1. Establish goals. What are the goals you want to achieve? Do you want to get out of debt? Buy a home? Establish wealth? Figuring out where you want your money to take you will help you find a reason to start saving and investing.

2. Gather data. Once your goals have been established, it's time to gather all your financial data. This can include things like your tax returns, insurance polices, bank and brokerage statements, etc.

3. Evaluate your financial status. After you have all your documentation in one place, it's best to meet with a qualified financial planning advisor who will help you make sense of your financial situation. The objective point of view will help you reach new conclusions about yourself and your finances.

4. Develop a plan. After you and your financial planning advisor have gone over your status, your advisor will help design a plan that is right for you. Depending on your goals, this may include setting a budget, creating an investment plan, or planning for your estate.

5. Implement the plan. Once your financial plan has been developed, it is up to you to implement it. This can take anywhere from a few months to the next twenty years.

6. Monitor. Once the plan has been implemented, you should get together with your financial planner from time to time to evaluate how it is working for you. Most investments are long-term, so you can most likely expect to have annual reviews. Of course, if your life changes through job change or loss, marriage, divorce or another unforeseen circumstance, you should visit your financial planner. Your planner will review your plan and help you make any changes necessary to accommodate your new circumstances.

Benefits of Financial Planning

One of the key elements to financial planning is understanding where you want to go and how your money will help take you there. By examining your life goals and understanding how your finances will help you reach those goals, you can make informed and meaningful decisions about your finances.

Having a good financial plan in place can help you meet your financial goals such as getting out of debt or purchasing a home. A good financial planner can also advise you on how to protect your family and possessions financially in case of emergency.

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.

From the outside, couples have it all when it comes to money. Many relationships have two working heads of household, with a nice, padded double income to provide stability. Other relationships have one full-time professional and one stay-at-home partner, who can take care of the house and cooking on a budget. It seems like the ideal scenario.

However, this is rarely the case. One of the biggest challenges of taking care of finances when there are two people to consider is that it's very easy for arguments and bad money habits to get in the way of the relationship. The result is often fighting, divorce, and a tough financial situation for everyone involved.

Why the Subject of Money is So Hard to Avoid

Of over half of the couples who undergo a separation or divorce, the culprit is money. No matter what type of income a family has, there rarely seems to be enough of it, and there never seems to be an easy way to discuss it. Many couples struggle with:

• How much of the family income should go to maintaining quality of life?

• How much of it should go into savings?

• Who should make the financial decisions?

• What happens when a nest egg disappears?

• What happens when there simply isn't enough to pay the bills?

• What if one partner is more of a financial risk taker than the other?

• What if there is a sudden change in jobs, family size, or financial situation?

When the economy takes a turn for the worse, all these questions become harder. After all, issues that might not have been a deal-breaker before suddenly hold the key to the entire relationship and the balance of power within it.

How Couples Can Address Financial Issues

As with any kind of long-term financial investment plan, the most important tool for being an economically sound couple is flexibility. Not only do couples need to be able to adjust the way they spend and view money, but they also need to be flexible with one another. Sometimes, this is as simple as finding ways to cut back the weekly grocery bill, and sometimes it's as huge as downsizing a home to start building a more viable retirement plan.

It's also important for both partners to take an interest in the long-term financial plans. This way, there are no secrets when it comes time to cash in a 401(k) or to start selling bonds to pay for the kids' college. If both partners know from the very beginning what type of savings plan is in place and what each party is contributing to the bigger picture, there is a much smaller chance of unpleasant – and potentially disastrous – surprises later on.

Relationships are difficult, for a variety of reasons not related to money. That's why it's best to start taking care of the financial questions early on. By working with a financial advisor before or after the marriage vows are exchanged, you can have that solid foundation firmly in place while you build an entire life together.

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.

Beginning in April of 2010, some of the largest brokerage firms in the United States are imposing penalties on accounts that don't fall within a substantially high investment range. As part of a larger plan to focus only on those top-tier clients who bring in an impressive income, these brokerage firms are bypassing the potential revenue from first-time investors and the average American family.

One of the biggest announcements is the addition of quarterly fees averaging at $35 for any account under $25,000. While the fee may seem fairly small ($140/year), it represents a rather large percentage when you're considering investments in the $1,000 to $10,000 range, which are already subject to commission fees and decreased payouts.

Additional changes at top brokerage firms include:

• Limited or no payouts on accounts under the $50,000 to $100,000 range

• Annual fees on accounts under the $1 million range

• No more discounts for friend and family member accounts

Some companies have also moved accounts under the $250,000 range to a "call center" model, wherein clients are served by whoever happens to answer the phone, rather than invited to build a relationship with a single broker.

Why All the Investment Changes?

The reasons larger brokerage firms are making these changes are primarily to free up their brokers to concentrate on larger investment portfolios. Although these companies certainly make money on the smaller accounts, the time needed to handle them doesn't provide the best outcome for the company's bottom line.

Of course, this doesn't mean that only millionaires can open brokerage accounts and set up investment plans. In fact, some smaller financial firms are more than happy to take on the clients the other brokers don't want. This is especially true among community-oriented brokers who specialize in small opening accounts and first-time investors. Internet brokerage firms are also taking advantage of non-millionaire investors, offering low- to no-cost initial set up fees and restrictions.

How to Get Started Investing

If you're looking to start investing with any dollar amount between $500 and $25,000, it's a good idea to look at small brokerage firms first. Many of these firms have information packets for first-time investors, and they may provide a breakdown of how much your investment costs will be and how they relate to your initial investment. These types of firms may also cultivate a more personal approach to the process, so that even if your investment is low, you'll still get access to "your" broker when you have questions, concerns, or changes to make.

Although the big name brokerage firms are the ones most people turn to in the beginning, it's important to realize that there are other options out there. Whether you take a do-it-yourself approach with an online brokerage firm, or you find a smaller, community firm that works with other people with your financial background, the most important thing to remember is that you don't have to have tens of thousands of dollars in order to start building a portfolio of your own.

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.