Move With Confidence Towards Your Goals

Erickson Financial Solutions Blog

This is some blog description about this site

What does a Living Trust do?

Link to 1-minute video: What's the Difference Between a Will and a Living Trust?

 

What does a Living Trust do?

There are two basic types of trust, revocable and irrevocable, and each has more specialized type trusts that might be encountered. Here we talk about the “Living Trust.”

A Living Trust is created, usually with the help of a local attorney, to control the disposition for your assets while you are alive and after your death. It is a document with written instructions on how the assets are to be used especially when you are not able to make a decision for yourself regardless whether your inability to decide is permanent or only temporary. The document identifies the trustee – that is the person who makes the decisions – and beneficiary - the person for whom the decisions should benefit. Essentially the trust becomes your legal alter ego.

Before you worry about giving everything away to a trust and losing control to someone else, understand the Living Trust can name you as the trustee and beneficiary. So, while the asset are not technically in your name you retain control. As an aside, since you retain control, there are no tax advantages to these types of trust.

Once the trust is establish and the assets placed in the trust, you live your life as you normally would except when you draw cash from the bank, sell something held in the trust, or write a check off the trust account, it comes from the trust.

When you die, the trust lives. The instructions of the trust describe what is to be done with the assets and who will control the disposition, if any, of assets. If married, a surviving spouse can be the trustee and beneficiary so the assets stay in the family.

The Living Trust bypasses the cost, hassle, and time delay of having to go through a court procedure called probate – a great benefit for larger estates and for those you leave behind.

 

One benefit of creating a trust is that you actually must put into writing what you want to happen – it can cause you to focus on what is really important to you.

Continue reading
0 Comments

Saving for College Costs

1 minute video: What's the Best Way to Set Aside Funds for Future College Costs?

 

Saving for College Costs.

One way to plan for your children's college education is through a 529 plan which is an education savings plan operated by a state or educational institution. The name 529 comes from section 529 of the Internal Revenue Code which created these types of savings plans in 1996. Although contributions are not deductible on your federal tax return, your investment receives tax-deferred treatment and qualified distributions to pay for the beneficiary's college costs. Qualified withdrawals come out federally tax-free, non-qualified withdrawals are subject to federal and state income tax and a 10% penalty.

College savings plans offered by each state differ significantly in features and benefits. The optimal plan for each investor depends on his or her individual objectives and circumstances. In comparing plans, each investor should consider each plans investment options, fees, and state tax implications. State tax deductions vary by the state of issuance. Plan assets are professionally managed either by the state treasurer's office or by an outside investment company hired as the program manager, but you have some control over how your investment is managed. You may be able to change to a different option in a 529 savings program every year although plan restrictions may apply.

Everyone is eligible to take advantage of a 529 plan and the amounts you can contribute are substantial. The availability of tax or other benefits may be conditioned on are subject to enrollment, maintenance, administrative, and management fees, and expenses per beneficiary. Plans can vary greatly and care should be given to fully understand your 529 plan before you invest

This video and text is for information use only and is based on information believed to be true. Much of the information is readily available, but text is drawn the Video: from the video and text is for information use only and is based on information believed to be true. Much of the text information is readily available, but most of the material is from the above video produced by FAclient. The reader acts on these ideas at their discretion and should consider consulting an accountant, financial advisor, or attorney. No promise is made that an idea or concept is appropriate or would work well for the reader. This is not an offer to provide legal advice or act as an attorney. Contact Steven Erickson JD, MBA, CFP(R), Accredited Wealth Management Advisor, Chartered Retirement Planning Consultant at 573-874-3888 This email address is being protected from spambots. You need JavaScript enabled to view it. , if you have questions or to set an appointment. Serving Clients in Columbia, Jefferson City, and the surrounding counties.

Continue reading
0 Comments

Can inflation hurt you?

1-minute video: Impact of Inflation in retirement

 

Can inflation hurt you?

Inflation is a rise in price over time. Commonly you will read about the Consumer Price Index (CPI) which provides the direction of prices of the component items upon which the index is based. Not everything you might buy in a week or month is in the list, but the idea is to get a representative sample of many important items.

Lately, news stories have talked about the rise in inflation. A rise in prices, or CPI, in isolation does not tell you much especially if not compared to something meaningful to you. For many years this rate has been low by historical standards, but now it is beginning to rise. Along with this rise is a rise in interest rates, both long-term and short term rates, which effects the rate borrowers pay for goods and services they pay for with debt whether a car, house or even a credit card debit that is not fully paid at month’s end.

So, can inflation hurt you? Yes, it might if your income fails to grow as fast as inflation. Hypothetically, if a grocery item you always consume costs $3.50 today and inflation is 4%, then in eighteen years you will need $7.00 to buy the same item. If you are on a fixed pension, you have a problem. The cost has doubled, but your income has not.

You can not control inflation, but you can control in what investments you place your money. For most people, some portion will need to be in assets which, in the long-term, rise in value faster than inflation. That way, when the item doubles in price, hopefully your investments will have more than doubled in value. Finding the right mix of investments for your situation will take time, effort, and expertise. The right mix is different for everyone and changes through time.

 

This video and text is for information use only and is based on information believed to be true. Much of the information is readily available, but some is drawn from Advisor Products articles. The reader acts on these ideas at their discretion and should consider consulting an accountant, financial advisor, or attorney. No promise is made that an idea or concept is appropriate or would work well for the reader. This is not an offer to provide legal advice or act as an attorney. Contact Steven Erickson JD, MBA, CFP(R), Accredited Wealth Management Advisor, Chartered Retirement Planning Consultant at 573-874-3888 This email address is being protected from spambots. You need JavaScript enabled to view it. , if you have questions or to set an appointment. Serving Clients in Columbia, Jefferson City, and the surrounding counties.

Continue reading
0 Comments

Roth IRAs are for minors too.

1-minute video: Is Tax Planning missing in your Retirement Planning?

 

Roth IRAs are for minors too.

 

We all know that having money grow without being taxed is great. In part, that is why we contribute to retirement plans at work and our IRAs.

 

As an adult, you may be ineligible for the powerful ROTH IRA if you earn too much money. But a minor child or college-aged child working a summer job or through the year can contribute to a ROTH IRA.

 

They can only contribute as much as they earn – gifts, investment or interest income does not count. The most they can contribute is currently limited to $5,500.

 

Imagine how much they would have by age 65 if a 17 year old contributed $2,000 a year each year to the age of 22 when the child the finishes college. If that money earned a modest return of 8%, with six $2,000 payments and no other contributions, the account will exceed $400,000 by age 65 AND be tax free when withdrawn.

 

Sounds fantastic doesn’t it. But how do you get them to deposit the money. Well, how about a match program. For every dollar they put in, you gift them money – kind of like what a tax deduction or company match does for you when you contribute to a standard retirement plan.

 

 

You surely can dream of your own creative ways to entice them to make the contribution. You never know unless you raise the issue with them.

This video and text is for information use only and is based on information believed to be true. Much of the information is readily available, but some is drawn from Advisor Products articles. The reader acts on these ideas at their discretion and should consider consulting an accountant, financial advisor, or attorney. No promise is made that an idea or concept is appropriate or would work well for the reader. This is not an offer to provide legal advice or act as an attorney. Contact Steven Erickson JD, MBA, CFP(R), Accredited Wealth Management Advisor, Chartered Retirement Planning Consultant at 573-874-3888 This email address is being protected from spambots. You need JavaScript enabled to view it. , if you have questions or to set an appointment. Serving Clients in Columbia, Jefferson City, and the surrounding counties.

Continue reading
0 Comments

Investment Diversification

 

1-minute viedo: Protect Your Portfolio With Diversification

 

Investment Diversification

 

Diversification is designed to gain the greatest return for the least amount of risk. Of course, no one knows the future otherwise you would not need diversification. For if you knew the future, you could invest in one type of investment and gain the most. However, we do know the future, so we use a strategy of diversification in hopes of capturing most of the upside growth while minimizing the downside hazards.

The best diversification is still not the same for everyone because everyone’s life and hoped for future is different. These and other factors taken together are used to construct a portfolio that is diversified.  

You can build a basic, diversified portfolio using four general areas in which you can invest using index funds, exchange trade funds, mutual funds.

1. Domestic funds: Typically, this is the most aggressive part of a portfolio, likely providing the greatest potential for reward. Historically, stock market investments have outpaced most other kinds of holdings. Nevertheless, the market is volatile and periodically experiences downward spirals, so to take advantage of the potential long-term outperformance of stocks you have to stick to your plan over the long haul. It's the value of stocks when you decide to sell, not what they may be worth during the time you hold them that truly counts.

2. Domestic bonds: Bonds can serve as a counterweight to stocks because the prices of the two kinds of investments sometimes move in opposite directions. Again, there are no guarantees that this will happen or that holding both kinds of assets will have the desired effect. If safety is a primary concern, you might increase your investment in U.S. Treasury bonds or high-quality corporate bonds, which tend to offer less volatility, though with somewhat lower returns. In other cases, you might opt for high-yield bonds with their higher returns and greater exposure to risk.

3. Short-term investments: Conservative investments such as money market funds and certificates of deposit (CDs) generally offer stability and help preserve your principal. Most CDs are backed by the Federal Deposit Insurance Corporation within generous limits. A main attraction of money market funds, which aren't federally insured, is their liquidity, but you do risk losing principal.

4. International investments: Foreign holdings in stocks and bonds can round out a portfolio. With international stocks, both your potential returns and possible risks may be higher than they would be with domestic stocks. International bonds, too, offer the opportunity for more reward at a greater risk.

There are many one ways to divide up the investments and weighing of the investment of each type to suit your personal needs. But hopefully these area will get you started.

This article was written by a professional financial journalist for Erickson Financial Solutions, LLC and is not intended as legal or investment advice.

© 2018. All Rights Reserved.

This video and text is for information use only and is based on information believed to be true. Much of the information is readily available, but some is drawn from Advisor Products articles. The reader acts on these ideas at their discretion and should consider consulting an accountant, financial advisor, or attorney. No promise is made that an idea or concept is appropriate or would work well for the reader. This is not an offer to provide legal advice or act as an attorney. Contact Steven Erickson JD, MBA, CFP(R), Accredited Wealth Management Advisor, Chartered Retirement Planning Consultant at 573-874-3888 This email address is being protected from spambots. You need JavaScript enabled to view it. , if you have questions or to set an appointment. Serving Clients in Columbia, Jefferson City, and the surrounding counties.

Continue reading
0 Comments