Lakeland Ledger articles

The new year is here! If you don’t already have a financial plan, it’s a great time to work on one. The three most important steps to get started are figuring out how much money you have coming in (your income), how much you are spending (your expenses), and building an emergency fund. Looking at your income will tell you how much money you really have to work with, after taxes. Total up your expenses, subtract them from your income, and you’ll have a good idea of how much your bank account should grow every month if you stick to the plan.

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The end of the year is near! Most of us have spent the past two months engaging in the usual holiday rituals of turkey and eggnog. During this time of year, it’s hard to resist the dual temptations of over-eating and over-spending. Fortunately for all of us who found it hard to resist these bad behaviors, a new year is right around the corner! With it comes the opportunity to start fresh and replace bad habits with good ones.

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Parents, especially those with young children, often find themselves thinking about how they will set aside money to help pay for college. They want the best for their children in hopes they will spend more time on their studies versus stressing over student loans.

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If you are like most people, you sometimes wonder if the stock market is really the best place to invest your hard-earned dollars. The stock market can be scary to the uninformed! There is no shortage of pundits, commentators, and bloggers who are willing to proclaim that the market is about to crash, that stocks will never go higher, and that the only way to be safe is to buy their newsletter (or worse, buy the silver, gold, insurance or annuity product they are selling!).

It is natural to feel some uncertainty about investments in the market. Stocks are volatile, which means the value of your investments can bounce up and down from day to day. The daily movements of stocks might be unpredictable, but the long term trends of the market are clear. Academic research and over 100 years of data prove that investing in the great companies in America and the world is the best way to create wealth from personal savings and to protect your purchasing power in retirement.

Plan for the journey, not the roadblocks

Irrational fear of market volatility can be damaging to your financial health. Fear often leads to inaction, and this “investment paralysis” can spill over into other areas of the financial planning process. The worst thing to do is to allow fear of the markets to stop you from doing all of the other things you need to do to achieve your goals: planning your spending and savings, risk management, estate planning, tax planning, and completing the other tasks on your personal financial planning action list.

If you don’t have an action list, the first thing to do is to get one! Create one yourself, or find a credentialed professional who will give you unbiased advice. Thinking about your life goals is a great place to start. From there, setting financial goals will be easier, and you will then be able to make better decisions and stick with your financial plan.

Focus on the goal, not the journey

Investing in the stock market is a means to an end. For most of us, the goal is to achieve financial independence – the point where we work because we want to, not because we have to – and then maintain our standard of living in a long retirement. The risk of running out of money in retirement is the biggest challenge we will face during this journey. Investing in stocks continues to be the best way to guard against this risk.

When planning your retirement, it’s always important to factor social security benefits into your long term financial plan. Married and divorced people have options available that might help retirement income.

So how does financial planning go hand in hand with social security benefits? CPS Investments Advisors CFO, Jim Luffman, says “Depending on your income sources and retirement savings in retirement, your social security benefits can either be a small financial planning factor, a large financial planning factor or your only financial planning factor. Hopefully, you will have other income sources, significant retirement assets, as social security benefits only play a small part.”

Keep in mind, if you want to continue a certain lifestyle when you retire, social security might not meet that standard alone. But, if you have a good retirement source, like a 401(k) or other investments, social security benefits could serve as a bonus once bills and necessities are paid. A portion of those benefits could also be used for additional investments, which will generate more revenue.

CPS Advisor, Rick Bernard, has this discussion with many clients. “Social security benefits can be an important part of a retirement plan. Understanding the applicability of benefits to a person’s family situation is necessary when estimating future benefits and planning how to fill the income gap if social security is insufficient.”

A financial advisor, who is a fiduciary, can always guide you when in doubt on how to plan the best path to retirement. We also want to encourage you to call your local social security office to find out your “full age retirement” and projected income. If you have a financial planning question or a topic you would like to know more about, email us at info@cpsinvest.com.

The Internal Revenue Service has issued warnings on new tax schemes that scammers are using to steal your money. People have lost millions of dollars to con artists posing as the IRS. “People need to always stay vigilant even after tax season has ended. “We continue to urge people to watch out for new and evolving schemes this Summer,” said IRS Commissioner John Koskinen. According to the IRS, here are three scams you need to know about to protect your assets.

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