Why Did I Start My Business?

I started Financial Journey LLC at the beginning of 2021. There were several reasons why I started my own business (during a pandemic!):

Health Event

In June of 2020 we had a major health event in my immediate family that could have ended much worse than it did. When you have a scare like that, you start thinking about everything that you take for granted and what it is that matters most to you. For me, experiencing that there might not be a tomorrow with a loved one really emphasized that time with family is something that I value most. Even though we were at the beginning of the pandemic and not having to go into the office every day, it made going into the office that much worse. If you’ve ever been to the DC area, then you know how bad traffic is. During pre–Covid times, I would leave my house in the dark and come home in the dark because traffic would at least double the amount of time it takes to drive the route. Then on the weekends, I was simply preparing for the next week and doing chores I couldn’t get done during the week. It just was not enjoyable and did not seem logical to spend all that time commuting because I barely saw my family during the week.

Location Freedom

With the pandemic came a lot of Zoom interactions. Remote work was on the rise before the pandemic, but Covid really skyrocketed remote work and Zoom interactions. Having the ability to do everything that you need from a laptop really gives you the freedom to be anywhere. Because of Covid, many offices gave up their office space and let their employees work remotely. When I started my business, I knew I wanted it to be completely virtual. I even thought about getting an RV and traveling around the country for a year with a laptop for work. Being completely virtual allows me to spend more time with my family because all I need is a laptop.

Access

Another thing I had tapped into while gaining experience at other firms is that most of our clients were retirees or came to us to see if they could retire. What about the younger generations that haven’t built up their nest eggs yet? Most firms require you to move your pot of assets to them so they could charge a fee based on your investment assets, which is why younger people miss out on advice until later in life. I joined XY Planning Network who understands that the younger generations are underserved and have been pioneers in the movement for Fee Only advice and offering different types of access to financial planning–which encompasses so much more than investment management. Luckily, I have been able to provide different ways to work with me—not only giving access to a Financial Planner without having a large pot of money, but also providing low–cost options so that financial planning is available to more people than just the wealthy.

Education

I really love all the different areas of financial planning and putting all the pieces together. I don’t like surprises when it comes to money and taxes and if you know how all the different pieces work, then there is little room for surprises when it comes to your money. Obviously, there’s no way to plan for life’s surprises, but if you understand how all these different pieces work (or work with someone who does), you can navigate things much better. You don’t know what you don’t know, and some decisions can have a huge impact on your finances. It is nice to have a thinking partner when you are faced with some of these decisions.

These are the main reasons that I started my own business. I love helping people get organized with their financial lives and educating them on how to best use their resources. Being able to do this from anywhere, having the ability to help more people than traditional financial institutions, and meeting people where they are is rewarding for me.

If you are looking for a trusted partner to help you navigate financial decisions, we are here to help. Schedule a meeting with us today to see how we can help you with your own financial journey.

Financial Journey LLC is a registered investment advisor offering advisory services in the states of Alabama, Florida, Virginia and in other jurisdictions where exempted. Information provided is for educational purposes only and not, in any way, to be considered investment or tax advice.

What Insurance Do My Accounts Have?

Currently there are two main forms of insurance for your accounts: FDIC and SIPC. FDIC is for your bank accounts and SIPC is for your investment accounts.

 

FDIC

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the US government that provides deposit insurance to protect depositors in case of bank failures. FDIC insurance covers deposits at member banks, including checking accounts, savings accounts, money market accounts, and certificates of deposit (CDs), up to $250,000 per depositor, per insured bank, for each account ownership category. This means that if you have multiple accounts in different ownership categories, each account could be insured up to $250,000.

What are multiple ownership categories? They are account types such as the following:

  • Single accounts
  • Joint accounts
  • Certain Retirement accounts
  • Revocable Trust accounts
  • Irrevocable Trust accounts
  • Employee Benefit Plan accounts
  • Corporation/Partnership/Unincorporated Association accounts
  • Government accounts

The FDIC has a detailed brochure explaining the different ownership categories and how the $250,000 limit for each category applies.

FDIC insurance is available to depositors at participating banks and savings associations, and it is backed by the full faith and credit of the US government. The insurance is automatic and does not require any action on the part of the depositor other than making sure the bank is a member of FDIC.

If a bank fails, the FDIC will typically step in to manage the bank’s assets and liabilities and pay out insured deposits to depositors as quickly as possible. According to the FDIC, in most cases, insured deposits are available to customers within a few business days after a bank failure. However, the actual timeline can vary depending on the complexity of the situation and the size of the failed bank. In rare cases, it may take longer for depositors to receive their insurance payments.

SIPC

SIPC stands for the Securities Investor Protection Corporation. It is a nonprofit organization created by Congress in 1970 to protect investors in the United States in case of a brokerage firm failure or fraud.

SIPC insurance provides protection for customers of member broker–dealers, up to $500,000 for securities and cash (including up to $250,000 in cash) held by the brokerage firm.

SIPC insurance does not protect against market losses or bad investment advice, and it is not the same as the Federal Deposit Insurance Corporation (FDIC) insurance that protects bank deposits. Rather, SIPC insurance is intended to provide an additional layer of protection for investors in case of a brokerage firm’s insolvency.

Again, the brokerage firm where you have your account must be a member of SIPC for this added protection.

 

Financial Journey LLC is a registered investment advisor offering advisory services in the states of Alabama, Florida, Virginia and in other jurisdictions where exempted. Information provided is for educational purposes only and not, in any way, to be considered investment or tax advice.

Investment Risk

The reason we make investments is to grow our hard-earned money. With investing, there comes risk. There are different types of risk associated with different types of investments. Generally, the more risk you take on, the higher your return should be. This volatility is the price you pay for the return you expect.

Past performance is no indication of future results, but the stock market has trended upward over time. Let’s keep the discussion simple and just discuss stocks and bonds. Generally speaking, stocks are riskier than bonds. If you look at the long-term performance of stocks and bonds, you can see that you have a much higher return with stocks. Over time, this is true. According to Morningstar’s Ibbotson SBBI chart, if you invested $1 in January of 1926, you would have the following returns for each asset class at the end of December 2021:

  • $14,086 Large Cap Stocks—10.5% compound annual return
  • $53,034 Small Cap Stocks –12.1% compound annual return
  • $177 US Long Term Government Bonds—5.5% compound annual return
  • $22 US Treasury Bills—3.3% compound annual return
  • $16 Inflation—2.9% compound annual rate

Looking at the huge difference in the above returns, you may ask why in the world would anyone invest in bonds at all? Keep in mind that these numbers reflect 96 years of data and most of us will not have that length of time to invest. So, the answer to the question has to do with volatility. Most people cannot handle seeing the volatility when it comes to their own assets because most investors intend to use their assets for some purpose—like retirement.

In summary, the more risk you take, the higher your return should be. However, you must be able to stomach the volatility AND know when the end game is for this asset so that you can start taking risk off the table beforehand (planning). So, as you are looking at the values of your accounts, keep in mind what your intentions are for these assets.

If you are looking for a trusted partner to help you navigate financial decisions, we are here to help. Schedule a meeting with us today to see how we can help you with your own financial journey.

Financial Journey LLC is a registered investment advisor offering advisory services in the states of Alabama, Florida, Virginia and in other jurisdictions where exempted. Information provided is for educational purposes only and not, in any way, to be considered investment or tax advice.

Moving Checklist

Whether you’re moving across the country or to a neighboring town, just the thought of moving is enough to make anyone feel overwhelmed. 

When you’re ready to move, don’t forget that a plan is key.

As someone who has recently moved, I have put together this helpful checklist for you so that your experience can go as smoothly and quickly as possible.

Just click here, make a copy and add your own items, or just print it out or download as is!

 

Financial Journey LLC is a registered investment advisor offering advisory services in the states of Alabama, Virginia and in other jurisdictions where exempted. Information provided is for educational purposes only and not, in any way, to be considered investment or tax advice.

 

 

 

5 Questions You Should Ask When Hiring a Financial Advisor

Finding the right Financial Advisor for the job is so important! You need someone who is trustworthy, competent, and affordable. 

Questions To Ask Yourself

Before you interview a financial advisor, you need to ask YOURSELF a few questions: 

  • What are you looking for in a financial advisor?
  • What services do you need?
  • What are you willing to pay for them?
  • How often do you want communication (frequent in-person, occasional call, or email)?

Knowing your goals and communication style will help you to quickly determine which financial advisor is the right one for you.

Questions To Ask a Financial Advisor

  1. Are You a Fiduciary?

You want your financial advisor to say yes! Fiduciaries are financial advisors who are required to:

  • Put the client’s interests first
  • Disclose important information, including their fees
  • Reveal any conflicts of interest
  1. How Do You Get Paid?

Financial advisors can make their money in several different ways:

  • Hourly
  • A fee based on a specific service
  • A percentage of the managed assets
  • A sales commission on investment products

To avoid any conflicts of interest, look for an advisor who is “fee-only.” 

  1. What Services Do You Provide?

Different advisors may only support you in certain financial areas, such as:

  • financial plans
  • managing assets
  • investment advice
  • retirement
  • insurance
  • tax planning

Before you hire a financial advisor, know what services are offered and if there are any extra costs for additional services. 

  1. What’s Your Philosophy on Investing?

A good financial advisor should fit your needs. You want someone whose investment philosophy matches yours and uses strategies that you understand. This will help you feel more secure through the ups and downs of the market. 

  1. Who Are Your Typical Clients?

You want to work with a financial advisor who has experience working with people in your situation. 

Conclusion

A good financial advisor should expect questions like these. They understand how important the relationship is between the advisor and the client and want a good fit for both parties which is why you should interview more than one. 

Your financial advisor is an important person in your life. Take your time to consider all the candidates and choose the one who’s best for you.

If you are looking for a trusted partner to help you navigate financial decisions, we are here to help. Schedule a meeting with us today to see how we can help you with your own financial journey. 

 

Financial Journey LLC is a registered investment advisor offering advisory services in the state of Virginia and in other jurisdictions where exempted. Information provided is for educational purposes only and not, in any way, to be considered investment or tax advice.

What Is Rebalancing?

When we speak of rebalancing in the investment world, we are referring to balancing your investment allocations back to where you started. For example, if I invested $100 and I wanted to be $50 in stocks and $50 in bonds, I would invest the money and make the trades accordingly. My 50% stock allocation and 50% bond allocation changes every day because the market moves every day and prices of these assets change along with the market. Essentially, my 50/50 allocation is set only on the day that I invest.

When Should You Rebalance?

It is good practice to look at your investment portfolio once per year and rebalance back to your original targets. The idea behind this is that you are taking some of your gains in the assets that are over your target and reinvesting those gains into the assets that have declined below your target.

A study by Gobind Daryanani titled “Opportunistic Rebalancing” suggests using thresholds as a rebalancing approach. For instance, you put a 20% threshold on each holding and monitor when those holdings hit the threshold, then rebalance. This is difficult to do without rebalancing software but can be done manually if necessary.

Another thing to be mindful of is trading costs. Don’t spend all of your returns on trading costs trying to keep your target allocations in line either.

The Bottom Line

Your investment allocation changes the day after you set it and needs to be monitored. It is ok for your allocations to change, that is going to happen and that is the reason you are investing in the first place. Just be mindful and make sure you take some of the profits off the table and stick to an investment strategy that you are comfortable with.

Financial Journey LLC is a registered investment advisor offering advisory services in the state of Virginia and in other jurisdictions where exempted. Information provided is for educational purposes only and not, in any way, to be considered investment or tax advice.

Guide to Achieving Financial Independence for Women

Financial independence is the ability to support oneself financially without assistance. Financial independence is an important goal for people of all backgrounds, but it is crucial for women who continue to be disadvantaged in the job market.

Money management skills and financial awareness can give women more confidence to invest and save for their future. 

A Closer Look at Where Women Stand With Finances

While many strides have been made, the fight for equality in finances among women and men continues. Here are a few startling statistics:

  • Only 5.8% of S&P 500 CEOs are women.
  • 85% of women control their families’ day-to-day finances.
  • When women invest, their portfolios outperform men’s by 0.4%.
  • Women of color only make up 3% of women in C-Suite positions, compared to 66% of white men.
  • Since the onset of COVID-19, more than 2.3 million women have left the labor force, compared to 1.8 million men.

Women Face Challenges in the World of Finance

Women who seek personal empowerment should focus on financial freedom. There are several roadblocks that make it challenging for women to partake equally in the financial world as their male counterparts.

One example is the pay gap. According to statistics from the U.S. Bureau of Labor, women earned only 82.3% of that earned by men. Many women of color experience an even wider gap. 

Household responsibilities, lack of resources to financial tools, and pay discrimination are all issues that women face compared to men.

While equal rights between men and women have increased, there is still a lot of work to be done. Here are a few key challenges women continue to face:

Women continue to be paid less than men

According to the U.S. Bureau of Labor Statistics, women still make less than their male counterparts. This gap widens for women of color.

Having children often disrupts a woman’s career

Having children as a working woman tends to result in a wage cut of 4% per child. For working women of color, this number increases to 10%. 

Exposure to financial literacy is less for women

Women are less likely to choose their course of studies that lead to financing careers. Men study economics almost 2x more than women.

Typically women have a longer lifespan than men

A man’s life span is typically 8% shorter than a woman’s. This leaves most women left to manage their own finances at some point in their life, particularly when their male counterparts pass away.

Strategies to Sustain Your Wealth

Women typically know more about managing their finances than they give themselves credit for. While some financial strategies are applicable at any time, some moves make sense at certain stages of life. Becoming more financially literate is the best way to start developing a financial plan.

When creating a lifelong safety net, it’s important to set financial goals and understand short, medium, and long-term money strategies.

To build independent wealth and financial independence, it’s important to start budgeting, investing, planning and saving for retirement.

  1. Create a Budget and Evaluate Your Spending Habits

Following a budget allows you to save for financial goals while living within your means. Women are typically better at managing money, but it’s always a good idea to reevaluate where their money is going.

 A good place to start is by listing how much money is earned each month, then itemizing spending into categories of necessary and unnecessary expenses. 

PAYING OFF ANY DEBT YOU HAVE

Uncontrolled debt causes stress and prevents women from attaining financial freedom. To start, consider adding paying down debt into your monthly budget. The debt avalanche and debt snowball methods are two strategies to do so. 

The avalanche method works by paying off debts with the highest interest rate first. The snowball method works by paying off debts by prioritizing the smallest debts first.

Regardless of the strategy, it’s important to always make more than the minimum payment.

  1. Investments

Investments can be a reliable source of income, can help counteract inflation and help to ensure your savings continue to grow. Many women lack the confidence to invest successfully, however, women are just as effective in investing as men, and oftentimes their portfolios are more successful. 

Surprisingly only 26% of American women invest in the stock market, even though nearly half of women view the stock market in a positive light. 

Investing helps to give women an equal opportunity to accumulate similar wealth as men.

INVESTMENT STRATEGY TYPES

Finding an investment strategy that is right for you will depend on your risk level and your goals for short and long-term investing. 

Do you want to be an active or passive investor? Active investors are typically involved in the buying and selling of assets, while passive investing tends to mean more “sitting and waiting.”

In general, short-term investments are designed to provide results within three years, while long-term investments provide financial security many years down the road, such as stocks, bonds, and real estate.

Portfolios can be high or low risk. A high-risk portfolio has an aggressive strategy. This has the potential of high rewards but could result in several ups and downs. Low-risk portfolios will not have as strong results as high-risk but also are not as volatile.

  1. Save, Create an Emergency Fund, and Build Credit

When planning your monthly budget, setting aside a specific amount for savings is important. I recommend keeping a 3-6 month emergency fund. This emergency fund can help with an unexpected family emergency, job loss, or health crisis.

Building credit is another great way to work towards financial independence. Pay off your credit card balances every month to enhance your credit score.

  1. Plan for Retirement

According to the World Health Organization, on average, women live 6 to 8 years longer than men. However, since women often have less than men saved, it’s common for them to outlive their money. Saving for your later years will help to give you a more enjoyable retirement.

Create a Life of Financial Freedom

In our society, there are a lot of challenges and inequalities that women face when it comes to finances and economic security. However, it is still possible for women to create a life of financial freedom in spite of these challenges. If you’re not sure where to start on your own financial journey, I encourage you to reach out to me for a free no-obligation consultation. Managing your finances is an important step in taking control of your life and creating the future that you want for yourself. With diligence and perseverance, you can help make your financial dreams a reality. Contact me today to get started!

Financial Journey LLC is a registered investment advisor offering advisory services in the state of Virginia and in other jurisdictions where exempted. Information provided is for educational purposes only and not, in any way, to be considered investment or tax advice.