Tag: personal finance

Long-Term Planning for Women in a Post-COVID-19 World

Published in: Resources |

If COVID-19 has taught us anything, it’s that we never know what’s in store for us. You could discover your new favorite flavor of ice cream this week. You could meet your future best friend next month. Or you could go to bed tonight living a normal life, and wake up tomorrow to find yourself in a global pandemic.

The COVID-19 pandemic thrust the world into a state of panic and uncertainty. Trips were canceled, plans were put on hold, and suddenly many of us began to question our life’s trajectory. However, over a year later, as restaurants show signs of life, people start to visit with friends again, and vaccines are (slowly) rolled out, it’s an important time to consider your long-term plan.

Although 2020 showed us that even the best laid plans are subject to unpredictable exterior circumstances, we should still be as prepared as possible, especially when it comes to finances. Due to women’s typically longer life-spans coupled with systemic and societal issues like the gender pay gap and career interruptions, long-term financial and estate planning is especially important for women.

How to map out your long-term financial plan

When it comes to thinking through your personal plan, here are a few steps you can take:

  1. Think about your dreams, goals, and aspirations. Start by thinking about your life 5-10 years from now and go from there. What does your life look like? Are you retired? Are you starting a new business? Are you raising a family?
  2. Now, think about each of those dreams, goals, and aspirations with a dollar amount attached to them. Are you living off of a pension or a retirement savings account? Are you taking out a loan to get that new business up and running? Do you have a child to care for, or even two or three? At the end of the day, you want your money to work for you and align with your ambitions. It may not be romantic to lay out your dreams with price-tags attached to them, but momentarily taking off those rose-colored glasses to look at your goals through a pragmatic lens could be the difference between making those dreams a reality and just fantasizing about them.
  3. Once you’ve sufficiently thought things through, it’s time to make a solid plan and put that plan in action. From saving money to investing, each person’s plan will look different. Working with a financial advisor to create an individualized plan tailored to your specific needs is a great place to start.
  4. Now that you’ve thought about your personal plan, go the extra mile and think beyond it. If you were to pass away or become incapacitated tomorrow, how would you want your assets distributed, and who would you want to handle your responsibilities? It may feel like an unpleasant topic and one that you’d rather put off, but one of the best things you can do for your future generations is put a sound plan in place, and when it comes to your estate, the sooner you start planning, the better.

At The Humphreys Group, we know that it can be difficult to put a short-term plan in place, much less a long-term plan. We’re here to help. Over 30-plus years, we’ve seen that it takes care and clarity to build the trust needed to personalize your financial plan. We take the time to learn about you, your dreams, and aspirations to develop a financial plan that will evolve with you during your life. If you’re interested in getting a second opinion on your long-term financial plan, reach out to our team today.

Overcoming Financial Imposter Syndrome

Published in: Resources |

You’ve probably heard of imposter syndrome — the psychological phenomenon in which an individual doubts their talents and qualifications, believe they only succeeded due to luck, and fear that they will be exposed as a “fraud.”

But do you know what financial imposter syndrome is? It’s when you finally start making a living wage, but you still feel poor and old habits remain. “If you’ve spent most of your career not earning much, then it’s more familiar to you than being financially stable,” New York Times writer Eric Ravenscraft writes. “Making enough money doesn’t feel real yet, and you’re afraid it will all go away.”

This anxiety can prevent you from taking care of yourself even though you can afford to — you put off expensive dental work, avoid getting your car fixed, or buy cheaper but not as healthy food.

It’s smart to keep living within your means; you don’t want to fall into the trap of “lifestyle inflation,” where you spend more money because you earn more money. But financial imposter syndrome can greatly affect your mental health, and it’s a problem you shouldn’t ignore.

Here are some tips on how to get over financial imposter syndrome.

1. Give yourself permission to spend money.

When you’ve struggled with paying your bills for so long, it can be hard to justify buying something you simply want and that would “only” bring you joy and improve your life. As New York Times writer Eric Ravenscraft writes, “If you manage to get a better paying job and improve your financial situation, no one automatically comes along to teach you what you can do with your new paycheck.” Try to make a conscious effort to break out of old thinking patterns; allow yourself to spend money on things from time to time that bring you joy.

2. Talk about it.

Voicing out loud what you’re going through — with a therapist, a financial advisor, a friend, or mentor — can help you see the financial facts of the situation versus your perception. The Humphreys Group regularly hosts Conversation Circles where we talk about the emotional aspect of money; consider coming to one of our events!

3. Create a script for times when you feel financial imposter syndrome creeping in.

When you feel old insecurities and unfounded worries coming in (e.g. “I can’t buy that — that’s something that ‘other people’ do,” “I’m selfish for spending money on better clothes/food/etc.,” or “It’s just luck that I got this job; I don’t deserve this money.”), have a mantra/script to remind yourself that you deserve financial success and that you worked hard to get where you are now.

Managing the Emotional Side of Money

At The Humphreys Group, we know that wealth management is best delivered with equal doses of expertise (the technical number crunching) and empathy (emotional intelligence). We know that addressing the non-numerical aspects of money results in better financial outcomes for our clients. If you’re interested in talking to us more about financial imposter syndrome, reach out to our team today.

The Top Money Podcasts to Add to Your List

Published in: Resources |

Podcasts have become increasingly popular over the years, but even more so during the pandemic. Spotify recently reported that podcast consumption has more than doubled. With everyone at home, people have been turning to podcasts for entertainment, information, advice, and community. We asked our Humphreys Group team what their favorite finance-related podcasts were. Here are their answers:

1. HerMoney with Jean Chatzky

2. Ellevate Podcast: Conversations With Women Changing the Face of Business

3. So Money with Farnoosh Torabi

4. Afford Anything

5. BiggerPockets Money

6. This is Uncomfortable

7. Side Hustle Pro

8. Money For the Rest of Us

9. Future Rich

10. Eye On The Market

11. Odd Lots

12. Masters in Business

13. Planet Money

14. Secrets of Wealthy Women

Financial Planning with The Humphreys Group

Let us know if there’s any other podcasts you’d recommend adding to the list! Don’t forget to check out last week’s blog post too, where we shared our favorite investment reads. Want more tips on personal finance? Check out our blog archive; every week, we share personal finance tips, commentary, and resources.

The Investment Reads You Need on Your Bookshelf

Published in: Resources |

With so much time at home during the pandemic, many of us have found ourselves reading voraciously and revisiting some of our favorite books. If you’re looking for some inspirational and educational reads in 2021, here are some of our favorite books on investing and personal finances:

1. The Investment Answer by Daniel C. Goldie and Gordon Murray

2. A Random Walk Down Wall Street by Burton Malkiel

3. On My Own Two Feet: A Modern Girl’s Guide to Personal Finance by Manisha Thakor

4. Worth It: Your Life, Your Money, Your Terms by Amanda Steinberg

 

5. Women’s Worth: Finding Your Financial Confidence by Eleanor Blayney

6. The Index Card: Why Personal Finance Doesn’t Have to Be Complicated by Helaine Olen and Harold Pollack

7. The Soul of Money: Transforming Your Relationship with Money and Life by Lynne Twist

8. Own It: The Power of Women at Work by Sallie Krawcheck

Financial Planning with The Humphreys Group

Do you have a favorite finance book to add to the list? Let us know! And if you’d like to continue the conversation about your favorite reads, join us at one of our Conversation Circles, where we have authentic conversations about personal finance beyond the numbers.

Company Stock Options and Financial Planning: What Works For You? 

Published in: Resources |

Your job likely offers you some form of equity compensation. Equity compensation can represent financial security and sustainability — but it also can come with a degree of risk. There are various factors to consider with compensation packages, such as your financial goals, taxes, and diversification strategies. In this week’s blog post, we go over the basics you should know.   

Equity Compensation 101

Equity compensation is non-cash pay offered to employees that represents ownership in a company. This includes options, restricted stock, and performance shares. Public companies and some private companies, especially startup companies, offer equity compensation to make up for lack of cash flow and attract high-quality employees.

Employee stock purchase plans (ESPPs) are company-run programs that let employees purchase company stock at a discounted price. Employees can usually contribute through payroll deductions; this typically builds up between the offering period and the purchase period.

Restricted stock unit (RSU) plans are company stock plans offered to employees as additional compensation. Instead of paying you your entire salary in cash, part of it is given to you in the form of company stock. It is usually listed alongside your base salary when you’re hired.

Stock option plans, also known as an incentive stock option (ISO), is a type of equity compensation given to employees and executives. Rather than giving you shares of stock directly, the company might offer derivative options of the stock.

The Role Of Equity Compensation In Your Financial Plan

Where does equity compensation fit into your financial plan? To understand this, you should go over the following with your financial advisor: figure out what kind of investor you are, watch out for concentrated wealth, understand the tax consequences of your investment decisions, and understand how recent tax law changes affects your wealth. This will help you make informed decisions about how to manage your equity compensation.

Work with The Humphreys Group Today

The right financial advisor can help you identify your core values, establish clear financial goals and create a financial strategy.

When you work with a financial advisor at The Humphreys Group, you’ll know that you’re working with a financial advisor that understands the importance of values. In August 2020, we earned the B Corp certification, which recognizes for-profit companies that use business as a force for good. B Corp companies are working toward reduced inequality, lower levels of poverty, a healthier environment, stronger communities, and the creation of more high-quality jobs with dignity and purpose. 

If you’d like to get started on your financial plan, reach out to our team today.

The Unique Retirement Planning Challenges That Women Face 

Published in: Resources |

Retirement planning can be a uniquely stressful and anxiety-inducing experience for women because of the financial burdens they face later in life.

Women typically live longer than men (about five years on average) and are more likely to live their final years alone. Living longer and living alone often means more health problems — which means more medical bills and potentially the need for long-term care. Women also might not have as much saved for retirement because of systemic and societal issues such as the gender pay gap and career interruptions to be the main caretaker for their children, aging parents, or other loved ones.

This financial anxiety around retirement is felt by women throughout the nation. A survey last year by the National Council on Aging and Ipsos found that fully half (51%) of women age 60 and older are worried about outliving their savings. Almost six in 10 women (59%) said they are worried about losing their independence.

Many couples do not anticipate how financially and emotionally painful these later-in-retirement expenses can be. When women don’t take part in financial planning and then lose a spouse or get a divorce, they often find out that they aren’t as prepared for retirement as they thought, or that their asset allocation is inappropriate for their level of risk tolerance.

That’s why it’s so important to regularly talk about these gender inequalities and possible scenarios with your partner and financial advisor. According to UBS, when couples do share in the financial decisions equally, they argue less about money and feel more confident in their financial future.  

A Changing Tide

Fortunately, surveys show that more married women are interested in taking a bigger role in their families’ long-term financial planning.

In a UBS survey, 64% of married women said they have a greater interest in discussing financial planning with their spouse due to COVID-19. Sixty-three percent said the crisis has affected how they think about money, and 51% said they intend to discuss their inheritance plans with their children because of the virus.

“The consistent message that we need to get across with couples is that long-term financial planning is just not something that can be delegated,” said Liz Sheehan of UBS in the Barron’s article. “You both have to be sitting at the same table for that conversation.” 

Prepare for Retirement with The Humphreys Group 

It’s important for couples to have open conversations about retirement now. A financial advisor can help facilitate these hard conversations and create a strategic comprehensive retirement plan that addresses these issues.

A financial advisor can help you with every facet of retirement planning — from Social Security optimization, addressing debt, planning for end-of-life costs for both partners, and creating a retirement plan that safeguards you from the “survivor trap.” Start planning for retirement today with The Humphreys Group. Contact us today.

Influential Women in Impact Investing

Published in: Resources |

Once viewed as a “finance backwater,” impact investing has come to the forefront as the world collectively comes to grips with issues exacerbated during the COVID-19 pandemic — from climate change, to systemic racism, to gender diversity in the workplace, to unequal pay, to food insecurity.

While impact investing is now a hot topic (it has $502 billion in assets under management globally), women have been leading the way in this field for decades. Women have been better represented in impact investing possibly because “this sector is inherently — perhaps by design — more diverse and equitable,” Irene Mastelli of Phenix Capital explains.

The list of women shaking up the impact investing field is endless, and we’d never finish this blog post if we listed them all (check out this article for a list of some of them). So in today’s blog post, we’ll just be highlighting three inspiring women in impact investing.

1. Amy Domini, Founder and Chair of Domini Impact Investments

Amy Domini

Amy Domini is a well-known leader in socially responsible investing. In the 1970s and ‘80s, she was a stockbroker in the Boston area. It was then she learned that many investors had strong views on what they would, and wouldn’t, invest in. That led her to understand the power of mission-driven investing, and soon she began pushing for divestment from South Africa, which was under apartheid rule. In 1990, she created one of the first social indexes of U.S. companies based on ESG criteria; later that decade, she started her company based on similar sustainable principles.

What are Amy’s hopes for the future of impact investing? “Companies need to report on the impact their operations are having on people and the planet in a manner that is quantifiable and relevant,” she told InvestmentNews. “With this information, investors will make better, more informed choices.”

 

2. Julie Gorte, Senior Vice President for Sustainable Investing at Impax Asset Management

Julie Gorte

Julie Gorte leads Impax Asset Management’s Sustainability Research team in conducting environmental, social, and governance (ESG) security analysis on prospective and current investments as well as the firm’s shareholder and public policy advocacy initiatives. According to Julie’s LinkedIn bio, her team was instrumental in the development and launch of the Pax Global Women’s Leadership Index, a custom index calculated by MSCI, in 2014.

Julie serves on the boards of the Endangered Species Coalition, E4theFuture, Clean Production Action, Great Bay Stewards, and is the board chair of the Sustainable Investments Institute. She also serves on the Investment Committee of the United Nations Environment Programme Finance Initiative.

 

3. Sallie Krawcheck, CEO and Co-Founder of Ellevest and Owner and Chair of Ellevate Network

Sallie Krawcheck

Sallie Krawcheck’s professional mission is to help women reach their financial and professional goals. She hopes this will enable them to live better lives and unleash a positive ripple effect for their families, communities, and economy.

Sallie is the CEO and co-founder of Ellevest, a digital, mission-driven investment platform for women. Ellevest is a champion of impact investing; ESG funds are a big part of their Ellevest Impact Portfolios because they believe that by investing in companies who follow good ESG practices — and excluding those who don’t — their dollars can help advance women.

Impact Investing with The Humphreys Group

At The Humphreys Group, we’re passionate about helping investors align their money with their values. If you’re interested in getting started with impact investing, reach out to our team today.

Required Minimum Distributions (RMDs): Rules Investors Should Know

Published in: Resources |

The end of the year is usually when retirees have to take their required minimum distributions (RMDs). However, this year, seniors don’t have to take them. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law in March 2020, allows anyone to forgo the usually mandatory annual withdrawals from their retirement savings.

The CARES Act waives the rules for RMDs for the 2020 tax year, but it’s still important to understand the ins and outs of RMDs. Here, we answer some frequently asked questions:

FAQ About RMDs

1. Why do RMDs exist? Is it just to prevent investors from deferring paying taxes on retirement assets indefinitely? 

Traditional IRAs and other retirement accounts such as 401(k)s allow taxpayers to contribute pre-tax earnings that can grow tax-deferred until withdrawal. The required minimum distribution (RMD) ensures that these earnings are eventually taxed. The required distributions are calculated based on life expectancy so that the account is gradually depleted over the lifetime of the taxpayer.

2. How does the SECURE Act change the initial age threshold for RMDs? Is a good or bad thing for investors?

Previously, account holders were required to begin taking RMDs in the year they turned 70.5 (with a deadline of April 1 for the first RMD only). The SECURE (Setting Every Community Up For Retirement Enhancement) Act, which passed in December 2019, allows those account holders who have not yet begun distributions to delay their first RMD until the year they reach age 72. The delay will afford investors additional time for tax-deferred growth, as well as postpone the inevitable tax bill.

3. How do RMD deadline rules work for a 401(k) vs. an IRA?

The SECURE Act also delays RMDs to age 72 for 401(k)s and other defined contribution plans. There are some exceptions for people who continue to work beyond age 72.

4. Can you offer some strategies to avoid the penalty for not taking RMDs on time?

If you fail to take your RMD on time, the penalty is 50% of the RMD amount. Set a reminder for yourself to take your first RMD, as you would for any other significant obligation.

You can take your RMD at any time during the year, so you may choose to take your distribution early to avoid a last-minute scramble. Some people break the distribution into monthly payments, or take a lump sum early in the year as part of their tax preparation process. One of our clients, for instance, likes to take the distribution on their birthday to celebrate all of their disciplined years of saving.

5. Is there ever a scenario where a Roth account would be subject to RMDs?

RMDs are not required for Roth IRAs. Withdrawals from Roth IRAs are not taxable because the contributions were made from earnings that had already been taxed. The IRS has no incentive in requiring distributions.

The only scenario in which RMDs apply to a Roth IRA is if you inherited it from someone who wasn’t your spouse before 2020. Before the SECURE Act, non-spouse beneficiaries of traditional and Roth IRAs were required to take RMDs based on their lifetime. However, now that the SECURE Act is in effect, those beneficiaries must withdraw the full balance of the IRA within 10 years, whether it’s a traditional IRA or a Roth IRA.

6. Are there any other rules to know about taking RMDs?

If you have multiple IRAs, you must calculate each account individually, but you can take your total RMD amount from just one IRA or a combination of IRAs.

If you inherit an IRA or a 401(k), you can no longer stretch the RMDs from those accounts over your lifetime. Beginning in 2020, non-spouse beneficiaries of inherited IRAs will be required to distribute the full balance of the account within 10 years. This applies to Roth IRAs as well.

A strategy for reducing the tax impact of an RMD is to use a portion of the distribution to make a qualified charitable distribution (QCD). The amount of the QCD is excluded from your taxable income up to the amount of the RMD and not in excess of $100,000.

Have Any Other Questions About RMDs? Reach Out to Our Team

At The Humphreys Group, we’re passionate about helping investors gain financial confidence and own their financial power. And that starts with knowledge. If you have any other questions about RMDs and the rules for this year due to the CARES Act, reach out to our team today.

Recommended Reads on Impact Investing

Published in: Resources |

You’ve probably been hearing more about impact investing lately. According to Morningstar, the first half of 2020 saw a record $20.9 billion flow into sustainable funds. As we’ve written on the blog before, the global COVID-19 crisis, social unrest, and economic inequality have highlighted how connected we all are and how deeply we need more efficient systems. If you’re interested in learning more about impact investing, these three reads are a great place to start:

1. Real Impact: The New Economics of Social Change by Morgan Simon

Impact investing has been a hot topic within investment circles for a long time, and for good reason — when like-minded investors pool their resources with a single mission in mind, they have the potential to be a powerful force for good. But after nearly 20 years of leading and managing endowments and foundations, Morgan Simon has noticed that impact investing often comes up short. More often than not, she says, well-intentioned investors choose to address the symptom (for example, temporarily improving the circumstances of underserved communities) without treating the disease (for example, addressing the power imbalances in our economy).

In Real Impact, Simon breaks down why impact investing often fails to maximize its potential, proposes a new model and set of principles that might broaden its influence, and shares stories that bring these principles to life. She passionately argues that investing can be used to foster real, transformative change, and challenges the reader to help build a better economy and healthier world.

2. The Power of Impact Investing: Putting Markets to Work for Profit and Global Good by Judith Rodin and Margaret Brandenburg

Doing good in the world of and getting a return on your financial investment does not have to be an either/or proposition. Enter impact investing — an approach to investing that combines the desire for a financial return with the desire to produce social and environmental benefits. In their book The Power of Impact Investing, Judith Rodin and Margot Brandenburg map out what it means to be an impact investor, the range of investment opportunities that are available, and perhaps most importantly a chapter entitled “Getting Started” to help you, the investor, get launched. They bring a wealth of expertise to the topic and their passion for impact investing and the positive change it can produce is apparent throughout the book.

Their book is a call to action for those who are curious about this form of investing. As they point out, it may not be the right answer for everybody, but it is a way to harness the power of capital markets for social good. Not designed to replace traditional philanthropy or grant making, impact investing provides an additional tool in the battle to improve lives and solve some of the world’s biggest problems. Impact investing is a means of using capital to drive financial value and social and environmental impact simultaneously. In other words, you can have your cake and eat it, too!

3. Winners Take All: The Elite Charade of Changing the World by Anand Giridharadas

This New York Times bestseller looks at how the global elite’s efforts to “change the world” actually preserve the status quo and obscure their role in causing the problems they later seek to solve. It’s an essential and fascinating read for understanding some of the egregious abuses of power that dominate today’s news. Anand Giridharadas takes us into the inner sanctums of a new gilded age, where the rich and powerful fight for equality and justice any way they can — except ways that threaten the social order and their position atop it. They rebrand themselves as saviors of the poor; they lavishly reward “thought leaders” who redefine “change” in ways that preserve the status quo; and they constantly seek to do more good, but never less harm.

Giridharadas asks hard questions: Why, for example, should our gravest problems be solved by the unelected upper crust instead of the public institutions it erodes by lobbying and dodging taxes? This book points us toward an answer: Rather than rely on scraps from the winners, we must take on the grueling democratic work of building more robust, egalitarian institutions and truly changing the world — a call to action for elites and everyday citizens alike. Once you get a taste of Giridharadas’ message and style, you may want to follow him on Twitter (@AnandWrites) and subscribe to his newsletter The.Ink (https://the.ink/). You can rely on him for a fresh, informed, original and intelligent take on today’s current events.

Impact Investing with The Humphreys Group

Let us know if you read one of these three books on impact investing! If you want to learn more about impact investing, reach out to our team today.

6 Investing Tips for Gen Z and Millennials

Published in: Resources |

Your 20s is a great time to get into the stock market. Whether it’s in a taxable account or retirement account, investing early gives your money lots of time to grow and lets compound interest work its magic.

Why Start Now?

To understand the consequences of waiting to invest, consider this example. Let’s say you start contributing $100/month at age 25 to your retirement, and you do so for 40 years. Assuming a 7% return, you’ll end up with $260,000 in your retirement account at age 65. If you wait until you’re 35 to begin that contribution, all else being equal, you’ll have only $120,000 in your retirement account at the same retirement age. That ten-year delay would cost you over half of your retirement savings! (Check out the SEC compound interest calculator to play with the numbers for yourself.)

Tips for Investing in Your 20s

Here are our tips and strategies for investing in your 20s:

  • Invest in mutual funds, not individual stocks. The days of old-fashioned stock-picking are long gone — mutual funds offer both diversification and professional expertise, two vital components of investing.
  • Diversify. Buy funds that invest in US equities, international equities, large cap, small cap, fixed income, real estate, etc. to give yourself exposure to all areas of the market and minimize risk.
  • That said, don’t overthink it or worry about picking the “wrong” fund. How soon you start investing is more important than what you invest in.
  • Set up automatic contributions. By investing a consistent amount on a regular basis, you’ll sometimes buy when the market is low, and sometimes buy when it’s high. This strategy will ultimately allow you to buy shares at a lower average cost over time and hopefully help you avoid any temptation to “time the market.”
  • If you’re wondering what account to open first, look to your employer and see if they offer a retirement plan like a 401k or 403b. If they offer an employer match, contribute at least as much as is required to take full advantage of it. If you don’t, you’re essentially leaving free money on the table!
  • If your employer doesn’t offer a retirement plan, consider an IRA or Roth IRA. Roth IRAs are generally advantageous for young people but do keep in mind that there are income limitations involved.

Investing Mistakes to Avoid

Here are investing mistakes that 20-somethings should avoid:

  • Monitoring your investments too closely. Instead, you should set it and (kind of) forget it. Check your account quarterly to give yourself a sense of how much you’ve saved, but don’t check it regularly, especially during market swings. That will just lead to unnecessary anxiety and might prompt you to feel like you have to sell your investments when you should simply be riding out volatility in the market.
  • (Literally) buying into the latest trend. Don’t be seduced by financial sensationalism. The sooner we learn that smart financial decisions are usually not very exciting, the better!

The Advantages of Investing in Your 20s

When you’re in your 20s, your needs are likely much more straightforward. Investing for yourself now gives you more space and financial wherewithal to attend to your other goals when you get older.

People in their 30s and 40s have a lot of competing financial priorities: childcare, saving for their children’s college, saving for their own retirement, maybe beginning to help elderly parents… the list goes on. It’s a lot to juggle and can be overwhelming to decide what to prioritize.

Financial Planning with The Humphreys Group

Interested in learning more about investing and how you can get started early? Reach out to our team today.