How to end up with enough money
Thursday, June 5, 2014 - Galveston County Daily News
By BILL CHERRY
Bill Cherry is a financial coach with www.ParkAvenueWealthCoach.com.
If you listen to the radio as you drive about on weekends, you probably hear the 30-minute — sometimes hour long — infomercials bought and paid for by local financial product salespersons.
They cloak that they are salespersons by calling themselves financial or investment consultants.
Some offer free evening seminars where they promise you’ll be served homemade cookies, hot from the oven, or a free dinner if you’ll show up.
And they claim that by the time you leave the free seminar, you will know how to redirect your savings program so that thereafter, you will be in fine and safe financial shape, regardless of the depth of the losses you may have incurred during the 2007-2008 financial crisis.
I have purposely attended at least 10 of the promised fix-it-all seminars, and found them to be nothing more than a way to get attendees to make appointments to be individually strong armed at the lecturer’s office.
Since 1962, I have privately had clients with whom I help with their financial planning. It is a business I didn’t go into on purpose. I was asked to help a friend’s widowed mother, and from that grew referrals.
In addition to what I learned from years of formal education, I’ve also developed some strong opinions during the past 52 years. Here are some of them.
• Deposit the same amount on the same day every month in your investment account, no matter what. It’s called Dollar Cost Averaging. When you retire and begin withdrawing, do Dollar Cost Averaging in reverse order.
• In general, buying lump sum investments at one time or selling them at one time is an imprudent overreaction.
• Do your best to make certain that the sales charges and account management fees attached to your wealth accumulation products are as low as possible.
• Do your best to have a valid tax planning strategy. For some people, for an example, Roth IRAs are more prudent than 401Ks.
• Don’t ever allow your investments to be churned.
• Don’t fall for the idea that you need to solely invest in equities that will offer a hedge against inflation. What happens if they go down in value rather than up?
• The one empirical thing that you want to do is to at least end up with the gross amount you saved. Never lose sight of this.
• You need to make certain that your savings are by definition, safe money. Safe money is made up of investments that can’t be seriously invaded by life’s unfortunate circumstances — divorce, judicial judgment, your kid wanting you to bail him out of his financial problems, etc., or the whims of the economy or those of a volatile investment portfolio.
• Don’t borrow money that will be secured by an exempt asset in order to pay money owed on debt that is unsecured.
• Life settlements are an improper investment for most people who are soon approaching, or are already into their retirement years.
• Don’t take out a home-equity loan so that you can pay off credit card debts or put your kid through college or pay off your truck, car or boat loan.
• Never enter into a reverse mortgage unless or until it is your last resort. I don’t care what Robert Wagner or Andy Griffith say. Explicitly trust me on this one.
• Don’t give away large sums of money while you’re alive; provide for those distributions to happen after you’ve gone to your heavenly reward.
• The idea that people don’t need permanent life insurance, regardless of their chronological age, is insanity. “Buy term, invest the difference,” is so riddled with chances for misfortune that to follow that advice is, in my opinion, total Pollyanna.
• And then there’s the new problem that is as surreptitious as not sufficiently insuring your life. It is to not insure that if you have a stroke, become disabled from dementia or Alzheimer’s disease or a mired of other costly health misfortunes, that the cost of your care won’t wreck your family’s accumulated assets or throw you into bankruptcy. Every adult, regardless of age, needs sufficient extended care insurance, and the earlier in life that you buy it, the cheaper the monthly premiums will be.
Financial coaches are true fiduciaries. We don’t sell anything but our knowledge. Our income is not based on where you save your money, or whether you follow our advice at all.
For a reasonable flat fee, we provide you with an educated financial plan specifically tailored for you.
The chances are you probably need one of us, even if only for a second opinion.
Meanwhile, stay away from salespersons’ seminars with their free cookies and dinners. Those who use them, use them to build their customer base to primarily sell their products rather than to provide educated financial advice.
William Speakman Cherry
972 677-7029 214 593-8563
University of NorthTexas
WashingtonUniversityGraduateSchool of Business
University of NorthTexasGraduateSchool of Arts and Sciences
RiceUniversityJesseJonesGraduateSchool of Administration
Chartered Life Underwriter (CLU)
American Institute of Banking Commercial Lending
Licenses and Memberships
Texas Licensed Real Estate Broker (Since 1966)
NASD Registered Financial Principal (Since 1968)
Texas Securities Salesman (non-active)
Texas Property Real Property Appraisal Arbitrator (non-active)
Metrotex Association of Realtors and Multiple Listing Service
Marquis Who’s Who in America, 2007
Marquis Who’s Who in Finance and Business, 2008
Marquis Who’s Who in the World, 2008
Marquis Who’s Who in U.S. Real Estate, 1980
Mardi Gras Knights of Momus
National Trust for Historic Preservation
World Affairs Council
Lake Highlands Chamber of Commerce
Lake Highlands Neighborhood Association
Former Adjunct Professor – Economics and Finance
St. ThomasUniversity, Houston
Religious Affiliation – Episcopalian
Church of the Incarnation, Dallas