Know What Investments You Own

More than a third of women in the U.S. are the breadwinners in their house. That’s pretty exciting! Even if women are not the breadwinners, more than 50% of women in a two adult household manage the day-to-day finances of their home according to the October 2016 study from Allianz Life Insurance Company of North America, Allianz Women, Money, and Power Study. These women are basically the CFO of their homes; paying bills, paying for groceries, kids’ expenses, and essentially running the finances of the home.

However, running the household finances and knowing how your money is invested are two entirely different concepts. Often during conversations with friends or during financial seminars we conduct we are frequently disappointed to hear women say they have no idea how their money is invested making comments such as “Oh my husband takes care of that” or “I don’t know because that is not my responsibility, I just pay all the bills for the household”.

Women don’t need to be experts in investments but what we do recommend is that at a minimum, women know the allocation of their investments and the difference between investment vehicles. How much do have invested in the various stock markets, how much do you have invested in bonds? Do you know the difference between a stock and a bond? Do you understand the difference between a stock mutual fund and a stock Exchange Traded Fund (ETF). Do you understand all your investments?

Why is it so important to understand what you are invested in? Well, what if the unimaginable happens and as a woman, who has let your partner manage the money, you find yourself in a situation where your partner is suddenly unable manage the investments due to incapacity, death, or divorce? Understanding how your allocated among investment vehicles is a necessity when it comes to making sure you meet your financial goals. We are not advocating that you read the investment section of the newspaper daily or watch financial television daily (we actually don’t want you watching the “talking heads” daily) but learning the difference between owning a stock, a bond, or a fund or ETF of stocks and bonds is crucial.

As in all areas of gaining knowledge, it takes time so start slowly and maybe pick up a book about investing 101. When you run across an investment article peruse it, maybe turn to a financial channel occasionally when you are in the car and start to familiarize yourself with the terminology. Knowledge is power and if you ever find yourself in a situation where suddenly you are responsible for your wealth you will be better poised to make smart decisions about how your money is invested to meet your goals. Always remember, if an investment sounds too good to be true then chances are, it is too good to be true!

New Year’s Resolution

Many of us start the year with the resolution to “get in shape”. That’s a great resolution assuming you mean get in “financial” shape! You have plenty of time now and later to get physically fit but time might be running out to get financially fit. Remember, no one is going to give you a loan for retirement and think about all the time you’ll have in retirement to get into shape.

Vow to do one or all five of these financial tasks in 2016 and you are sure to feel really good about the shape you are in by the end of the year!

        1. If you are employed and your company has a 401(k) plan (or variation, SEP, SIMPLE, etc) CONTRIBUTE! If your employer adds a match then CONTRIBUTE up to the max amount they are matching.
        2. If you do not have a company sponsored plan but have earned income then CONTRIBUTE to an IRA. Either a regular or a Roth IRA. Depending on your income you can contribute up to $5,500 for 2016. If you are older than 50 you can contribute an additional $1,000 for a total of $6,500.
        3. Make sure your insurance needs are up-to-date. Remember you should insure against those things you cannot afford to lose so look at your; home owners, auto, term, and disability insurance needs. Insurance in itself is not an investment.
        4. Make sure your will or estate plan is up-to-date. Has anything changed in your life since the beginning of 2015? Make sure your plan is updated to reflect any changes.
        5. If you have credit card debt set up a plan to pay off the highest interest rate card first making minimum payments on the other cards until the highest one is paid off first. Then work your way down.

By doing one, or hopefully all, you will be sticking to a New Year’s resolution. How often have you been able to do that?

Plan as if you are Single.

Plan as if you are single! While that might seem rather negative if you are married now, there is merit to planning for a time when perhaps you will not be. Ninety percent of women will be in charge of their finances at some point in their lives due to death, divorce, or inheritance. Having the means to support oneself eliminates the “Bag Lady” worry. But what is more important sometimes is how to plan for the unexpected if you are single and have the means but not the capacity to access your funds.

Recently we have had two instances of single women needing to have their children able to access their accounts. One client was preparing for the “what if’s” while the other was actually a daughter of client that was in the middle of a “what if”. Simply listing your beneficiaries on an account, or having a will, or even giving Limited Power of Attorney (LPOA) status to others on your accounts does not give enough access to the accounts at a critical time.

It is prudent to do your planning so that when you die your assets are distributed as you desire. But there is the potential for an interim time between when you are capable (mentally and physically) of accessing your funds and when they are ultimately distributed and this can be a very critical time. As fiduciaries on your accounts banks, investment firms, etc. are not allowed to move money on your behalf simply by the request of a loved one. Even if your children are listed as beneficiaries on your accounts it does not give them authority to direct the movement of money for you.

A Durable Power Attorney (DPOA) gives those you choose as trusted representatives the ability to access your accounts. For example, if you are in a car accident and end up in the hospital for a prolonged period of time, how will your bills get paid? What if you require substantial funds for your care? You may be temporarily incapacitated. No one can legally access your accounts if there is not proper documentation. A Durable Power Attorney is a notarized signed agreement that allows you to give a trusted representative access to your accounts. Of course the downside to this is that when you are healthy and able, the DPOA continues to be in effect.

It is for the “what if” moments that we cannot predict only plan for. If, at some point in your life, you find yourself single you should think about these moments before they occur. Also don’t forget to let a trusted representative know where your “important” papers are located so if there is an emergency they are readily located.

You know the saying…”Better Safe than Sorry.”