I was recently asked “what are some characteristics or traits you’ve noticed in people who seem to reach their goals?”.
Hmmmm…..good question.
I suppose I could be completely self-serving by saying “they click on my videos in my newsletter” but that’d be too obvious.
So, I’ll start off by saying “they treat their life and goals like a business”.
For the rest, you should watch the video.
Good morning. Mike Brady with Generosity Wealth Management, a comprehensive full-service wealth management firm headquartered right here in Boulder, Colorado, although I have clients in many different states.
Today, I wanted to ask a question that a client had of me. They asked after reading the book The Millionaire Next Door, it was like, “Mike, in your over 20 years of meeting with clients, hundreds if not thousands, what are some of the characteristics that you’ve seen that are similar to those that have achieved their goal? People who perhaps 20 years ago you met and they stated what their intention was and then they were successful in reaching their goals, and others that were not successful.” I want to answer that question here today. By the way, read that book The Millionaire Next Door, because you’re going to find some habits that this book talks about that people with very good balance sheets that have worked hard for their net worth, but they have many similarities together. That’s really kind of what I’m talking about here today but just more of from my anecdotal and observational experience.
The first thing is, they treat their finances, their goals, their retirement goals, etcetera, as a business. They have a good conversation with themselves and with me and with their spouse and perhaps their family about where they want to go, and they have a plan; they have a goal, they have a plan and they review it periodically and that could be within the year, maybe annually, maybe every other year just to track where it is that they’re going. They also understand the relationship between income and expenses, saving and investing. You’ve seen me do this before. This is your income and this is your expenses and the difference between the two, the income has to be greater than the expenses. It’s that simple. If you don’t know if your expenses are equal to your savings or if they’re even greater, than that’s the first warning light on the old dashboard that you might not be setting yourself up for success.
No matter how busy a client is, whether they’re a doctor, a lawyer, a business owner, or a family with a bunch of kids, the people that I have found have been very successful treat their life like a business. I have to say one indication of that is they a lot of times return paperwork very quickly. They have prioritized up all dealings with their finances and reaching their particular goals. That could be educational goals for their kids as well. That could be providing for older members of their family you know, etcetera. Whatever those goals are they have made a real priority, they’re organized, and they address it accordingly and in a timely fashion.
Another thing is they are engaged. They review paperwork, they ask good questions, and they’re more engaged and that’s one thing that I’ve found is common amongst those that reach their goals. Then the last thing is a little self-serving and I’m just going to preapologize on that one, but they have good advisors and they have an estate planning attorney, they have a CPA, and they usually have a good financial advisor, and hopefully that’s me of course, that’s my observation. They listen to them, they ask questions, there’s a true dialogue, a relationship, a collaborative relationship, and they have a tendency to follow that advice particularly when all of those members are working together, agree on how to go forward and they have good advisors and they recognize the value that they’re bringing. Those are some things that I have found in my over 20 years of working with people, and I can many times tell starting off when I meet someone who doesn’t become my client whether they have the right habits or not just by the fact of whether or not I ask them for the data to do a financial plan and they can’t even pull that together. I really question at that time how serious they are about their goals in order to get a plan and then of course to review it.
That’s it for this week. Mike Brady, Generosity Wealth Management, 303-747-6455. If you’re my client, I love you. If you’re not my client, I would love to talk with you and hopefully we can both love each other and help each other out.
Are you interested in talking with me about your finances and investments but not sure if we’re the right fit?
I have clients of all portfolio sizes, ages, employment, and stages of life.
What I like to do is make a difference in someone’s life. Frankly, it’s just as rewarding for me to work with a young couple who are serious about planning and saving for their future as it is to manage portfolios and wealth for business owners and retirees.
Don’t be shy. If you’re curious about whether we’d be a right fit, give me a call and we can talk. It would be a great honor.
You’re probably hearing a lot about the Fiscal Cliff, and may be wondering
• What does it really mean?
• What are the implications?
• What can, or should, I do?
In order to answer these questions, I have a slightly longer than usual video this week (about 10 minutes), but one of the best ones I’ve done in a while (if I do say so myself).
This is a very timely subect, and you’ll be hearing about the Fiscal Cliff in all the media for the next month or so. Now is your chance to be as informed as possible, and take action if necessary.
Click on the video
TRANSCRIPT:
Good Morning! Mike Brady with Generosity Wealth Management speaking to you from Boulder Colorado. Hopefully you had a very nice Thanksgiving weekend.
Today, I want to talk about the fiscal cliff. Perhaps you have read or heard about the fiscal cliff and have wondered, “what the heck is it?” I mean they seem to talk about it like it is so obvious what the implications are and I thought I would take a step back with you and talk about the origin, kind of what the fiscal cliff is, but also what are some things that we can do between now and the end of the year and also what the implications may be for the stock market.
Let’s start off with the beginning. Back in 2001, there was a pretty much across the board reduction in income taxes from the lower rates to the higher rates about 3% give or take. At that time there were also child credit increases, which was a good thing. This was all renewed in 2010. It was supposed to expire in 2010. At that time the Obama administration with the Democrat Senate and House of Representatives extended it for another two years and that two years is coming up. So when it is described as the Bush era tax cuts, at this point really I would say it is the Bush and the Obama because really both sides of the isle have either started it or extended it. And so, at this point now, both sides of the isle want it extended as well, but they are disagreeing about how to extend it and to whom it is extended and which parts of it.
What does this really mean? Well, from an income tax point of view, pretty much across the board from the lower income tax rate all the way up to the higher ones; it is going to go up about 3%. I am going to throw up a graph there on the video and you’re going to kind of see how before and after it can go up. In addition capital gains are going to go from, at the very lowest it is going to go from 0 – 15 or from 15 – 20% on capital gains. Dividends are going to go from 15% all the way up to whatever your marginal tax bracket is, which could be 39.6 if you are in the very highest. Your payroll tax, two years ago, in addition to extending the tax cut, they lowered the FICA tax that is charged to the employees. It went from 6.2% down to 4.2%. Well that would be reversed. So 4.2%, so basically an extra 2% tax for those that are W-2 employees, well all people who pay FICA tax, so whether you are self-employed or a W-2. Also from an estate tax point of view, right now estate taxes are 35% to the amount in excess of 5.12 million, the amount that is excluded from estate taxes. If this isn’t resolved, in January it will be the amount over 1 million dollars per person, will be at 55%. It will go from 5.12 at 35 to 1 million dollars at 55%. A million sounds like an awful lot of money but once you start adding up life insurance and your house and your retirement account, it is very easy and quick to get over a million dollars. So this is a huge impact for a significant number of people.
You might ask yourself, who cares about all taxes, whether or not they are higher or lower, etc. And the argument, the reason why this is such a big deal is when taxes are raised, that is usually a decrease in production of some amount and so the question is although, for each dollar there is more of a tax in my example, right now we are talking about 3%, there might be less productivity in order to charge it on, so that your net after-tax is actually less to the federal reserve, to the federal treasury than you had before. Both sides of the isle ultimately want the tax rates to be lower because they believe that it will hinder the growth that has been happening most recently and harm the recovery that we’re seeing some legs under right now. So both sides want it. The question is to whom is the extension really going to be applied to. Is it going to be applied since the reduction was across the board, is the reduction across the board going to stay or are some at the very highest going to allow to be lapsed and so their rates go up when everybody else gets to stay the same?
That right there is where a lot of the compromise is going to happen in the next month or so. Now let’s talk about what could happen. I mean, essentially, number one, they could let it lapse. I don’t think that’s very likely. Both sides want something to happen. Congress has a tendency to work well when the pressure is on, when the public and when the media is putting so much of a spotlight on it. They could extend some but not others. That is absolutely possible. As a matter of fact, I would even argue that that is more likely, either some to all is going to be extended. Of a lack of the overhaul, the whole tax mode and that’s great, wonderful thinking, but that’s not going to happen.
What does this mean for the markets? Remember about a year and a half ago, the AAA rating of the US government was downgraded. At that time there was a huge decline in August and September and a little bit into October of 2011. There was a huge deal by S&P, or was it Moody’s? I can’t remember. One of the two, basically saying that they felt that the deficit was getting out of control and that we didn’t have the political will in order to solve it. This would be another further confirmation that that assessment a year and a half ago was actually true. I think that that would be a very bad thing if we are not able to get this resolved.
I still believe and you’ve heard me the last nine, 10 months or so, feeling strong about the underlying fundamentals of the private sector of the corporations, etc. Although we have a kind of a jobless recovery, the efficiency and the profitability of some of the corporations are great and I am feeling very optimistic and positive about that. This is a huge drain on the full economy of the United States and, of course, on the world because we are the world’s largest economy. I do believe that the market would go down and there is going to be a reaction to it. The question is how long that would be, whether that would be temporary or whether that would be permanent. If it does go down, I believe that it would be a temporary thing because the underlying fundamentals I still feel strong about.
A year and a half ago, let’s not forget, that the markets went down in August in September and they actually had a very nice rally after that. We got rid of some of the people who got scared. Those of us that were still invested in October, in general, in an unmanaged stock market index, did very well in the six months following. I think that this would be potentially a temporary downturn as well. We still have a whole month before now and then and it’s been hard to try to guess what the federal government is going to do and our particular politicians.
What can you do between now and then if you believe that tax rates are going to go up and it is not going to get resolved, basically you try to do more taxation in this year. You can sell those assets that have capital gains. You could reposition your assets, like for dividend paying stock, they can go over to maybe reposition in IRAs and some things of that nature. Or you are looking at bond issues, maybe it would make sense to go into municipals or tax-frees or something that is not fully taxable. There are a number of different things that you can do. If this does occur and what can we do in 2013? Absolutely we should consider the estate tax. At that point I will be talking with many of year to ensure that you have your estate planning and your estate planning attorney have really reviewed your particular situation as it relates to estate tax with various types of trusts and other things that you can do to try to minimize the very high estate tax that you might suddenly find yourself.
Anyway, that is the fiscal cliff in a few minutes. A few minutes, I think, probably turned into an even longer time, maybe ten minutes, which is a longer video than normal, but this is your summary.
Mike Brady
Generosity Wealth Management
303-747-6455
Hopefully I can help you out. If you are one of my clients, of course, I have an ongoing conversation with you. If you are not one of my clients and want to give me a call, go ahead and do so at 303-747-6455. My pleasure talking to you. You have a great day. Thanks, bye bye.
After a long campaign season, it’s finally over. Whew! You’re either very happy or sad this morning.
So, in order to give you a break and avoid inundating you immediately with my views on what this election return means, I’ve decided to answer the age old question “Do People Really Walk in Circles When They’re Lost?”.
I, of course, also tie this into my views on the importance of goal setting in your financial life.
Relax, sit back, and hear something refreshingly non-political.
TRANSCRIPT:
Good morning, Mike Brady with Generosity Wealth Management speaking to you from Boulder, Colorado. And today I’m here to answer the question- do people really walk in a circle when they’re lost? Do they end up where they started when they’re lost in a forest, or just lost anywhere.
And so, there was this great article (and this is what actually prompted my thought for this video) in Mental Floss, which is this great magazine, really interesting articles… I’m going to throw up on the video here the link to this article, but there was a scientist who put a bunch of volunteers in a Bavarian forest, and a bunch of volunteers in the Tunisian desert, and basically they had GPS on their body so they could track what happened-whether or not they did go back into a circle.
And the answer is- every single person veered off course. They were told to go from point A to point B, and every single person veered off course. However, the degree to which they veered off depended, frankly, whether or not they were able to have some vision. The people in the desert, when there was a moon out, were the straightest line people. They were able… they veered off a little bit but they had it in their sights and were able to navigate by the moon. When there was not a moon, when it was overcast, they were much less accurate and they did veer either left or right.
Those in the forest, very similar, but what is interesting is when they were in the forest, more than half went back into a circle- right back where they started. But every single one, the degree varied depending on whether or not they had some sight in the future. If it was a cloudy night they also went back and veered off but just much slower. And what’s really interesting is that when they had a blindfold on, the quickness with which they went back to the beginning was even faster.
So really it had to do with having a point in the future that you are going towards and being able to navigate and having other things around in order to keep you on the right track. That’s the way I read it. And it was a very interesting article, in my opinion, because it relates to what we’re doing in our lives.
We’re at point A- that’s today. And we need to determine where point B is. We might not know exactly where point B is- but seeking it out, and identifying it, and stating it I think is really, really important. And this relates of course to our finances as well.
Having a retirement plan, having a retirement analysis, does not guarantee that that’s going to happen. However, it’s my opinion that it does give you something to go towards and those that have that point in their mind and are tracking it consistently, perhaps every year or so, as you go toward your goal. You’ll vary, of course, some because we don’t know what the future holds, but vary less than someone who is completely blindfolded. And some people who are completely blindfolded absolutely make it to point B but it might be more luck, or happenstance than an actual plan of how they get there.
That’s really what I wanted to talk about today. I feel that so much emphasis is placed on “this investment” or “that investment,” which is important, don’t get me wrong, but I also think that one of the best things that you can do for yourself, and one of the best things that I do for my clients, the dynamic value that I bring, is really identifying what it is that we want to do first and foremost. Then how are we going to get there; and reviewing it in a systematic, professional way. And I think it increases our odds of getting there. It does not guarantee it unfortunately but it does increase our odds of getting to where we want in the future. If you don’t have that, if you are sitting here saying, “Gosh, I don’t know what point B is.” Talk with me. I’ll be happy to try to help you out with that. That’s, I believe, one of the dynamic values I and my firm, Generosity Wealth Management, brings to the table.
Hope you’re having a good election week. Half of you are probably happy with the result and the other half are not. But I just wanted to throw that in there as well. Mike Brady, Generosity Wealth Management-303.747.6455. You have a wonderful week. Thank you, bye, bye.
