Comprehensive Wealth Management

Watching the news and seeing sudden drops in stock prices or economic events that threaten your wealth is stressful. Market volatility is becoming more common in today’s fast-paced and interconnected world. However, depending on how you’re invested and what your financial situation is, a volatile market doesn’t automatically spell trouble.  At Breakwater Capital Group , we navigate economic uncertainty with personalized financial planning and investment strategies. As a fee-only fiduciary financial advisory firm, we proudly serve clients nationwide, with wealth management offices in Denver, CO, Paramus, NJ, and Greater Boston, MA. In this blog, we’ll explore what market volatility is, how to be mindful of it, and the strategies Breakwater uses to help clients manage it effectively.

As we embark on a new year, the pursuit of financial success often ends up as a New Year’s resolution. One crucial aspect that can’t be overlooked is the role of organization in achieving our monetary goals. We will explore seven essential steps that serve as a roadmap to financial success, covering everything from goal setting to debt management. In the book Atomic Habits by James Clear (worth the read!), he outlines four key principles or “laws”. The 1st law(Cue): Make it obvious. The 2nd law (Craving): Make it attractive. The 3rd law (Response): Make it easy. The 4th law (Reward): Make it satisfying. Many of these principles align with financial goal achievement. Let’s take a closer look. 1. Set Goals/Make it a Habit – Savings, Spending & Investing The foundation of any successful financial plan lies in setting clear and achievable goals grounded in habits. Categorize your objectives into savings, spending, and investing. Whether it’s building an emergency fund, saving for a dream vacation, or investing for the future, defining your outcome provides direction and purpose to your financial journey. Setting goals falls under the 1st law, Make it Obvious. Get it out in the open. What are you saving for? Why choose to spend money in one place versus another? What and how are you investing? Get specific. 2. Budget – Income vs. Expenses, Purchases Large and Small Creating a budget is akin to having a financial compass and as far as Atomic Habits goes this also falls under – “Make it Obvious”. In the end, it is empowering and confidence building to know what you can spend and what progress you are making toward a savings goal. Get clear on your income and expenses, accounting for both big ticket purchases and everyday expenditures. This step not only helps you understand your financial standing but also allows you to make informed decisions about where your money goes, ultimately paving the way for effective financial planning. 3. Savings – Emergency Fund, Down Payment, Car, Education Diversify your savings by earmarking funds for various purposes. Establish an emergency fund to cushion unexpected blows, save for a down payment on a house or a new car, and allocate resources for educational pursuits. A strategic savings plan ensures that you are prepared for life’s uncertainties while also working towards your long-term financial aspirations. If you are able to create good habits around saving, you can “Make it Easy”, meaning you can more easily meet your financial obligations, taking what was stressful to something that you can take in stride. 4. Spending(Travel/Leisure) While fiscal responsibility is crucial, it’s equally important to allocate funds for life’s most enriching experiences. Budget and plan for “fun” expenses, allowing yourself the joy of exploration within your financial means. An argument can be made that knowing that you can afford to add that snorkeling excursion makes it that much more fun. This balance between saving and spending on leisure ensures a holistic approach to financial well-being. If you link saving and spending to specific goals, you “Make it Attractive”. Planning and saving for a trip to Turks and Caicos just makes the whole adventure feel so much more exciting and doable. 5. Invest Investing is best done in the long term. There are a few Atomic Habit laws that apply here. The first is to “Make it Simple”, automating both your savings and investing is critical. Whether it’s your 401k or a brokerage account, consider setting up automatic contributions directly from your paycheck or having it withdrawn from your checking account on payday. If you don’t see the money, you’re less likely to miss it. “Make it Satisfying” also applies as you grow your assets over the long term and earn interest on your interest. All that you have accumulated through long hours of work, is now working for you. It is the power of compound growth, which Albert Einstein once described as the “Eighth Wonder of the World”. Effective investing involves a lot of factors, and if you’re not an expert, it’s wise to collaborate with someone who is. Research: Knowledge is power when it comes to investing. Dedicate time to research various investment options, understanding the risks and potential returns associated with each. This informed approach lays the groundwork for smart and strategic investment decisions. Having an understanding of what is happening in the economy, world financial markets and geopolitically will help you in every step of the process. Choose Investments: Building on your research, carefully select investments that align with your financial goals and risk tolerance. Whether it’s stocks, bonds, or other investment vehicles, a diversified portfolio is key to mitigating risks. Monitor Portfolio: Investing is an ongoing process that requires regular attention. Monitor your portfolio, making adjustments as needed to stay in line with your financial objectives and adapt to market conditions. A proactive approach ensures that your investments work effectively towards your long-term goals. 6. Maximize Company Benefits Companies look to get as much out of their employees as possible through compensation and benefits. It’s crucial to view these benefits as integral components of your total compensation and they should be maximized. 401k Company Match & Profit Sharing: Take full advantage of the benefits offered by your employer. Contribute to your 401k to maximize company matches and profit-sharing opportunities, providing a valuable boost to your retirement savings. Take Advantage of Student Loan Repayment Programs: If available and you qualify, explore and utilize any student loan repayment programs offered by your employer. This can significantly alleviate the burden of educational debts, freeing up more resources for other financial goals like saving and investing. Choosing the Right Health Insurance Plan: Carefully assess and choose a health insurance plan that suits your needs. Understand the coverage, deductibles, and copayments, and take advantage of any wellness programs offered by your employer. A well-considered health plan protects both your health and your wallet. 7. Plan to Pay Off Debts: Paying off debts falls under, “Make it satisfying”. Whether it be paying off your mortgage, education or a boat, making that final payment is gratifying. Student Loans: Develop a strategic plan for repaying student loans, taking into account your financial situation and available repayment options. Tackling student loan debt head-on is a crucial step towards financial freedom. Consumer Debt: Credit Cards: Addressing credit card debt requires a clear and disciplined approach. Develop a repayment strategy, consider consolidating high-interest debts for a more manageable plan, and commit to reducing and eliminating consumer debt. This proactive stance puts you on the path to financial stability. In conclusion, the road to financial success is paved with intentional and organized steps. By setting goals, creating a budget, saving strategically, balancing spending, investing wisely, maximizing company benefits, and tackling debts head-on, you empower yourself to take control of your financial future. As we embrace a new year, let these seven steps guide you toward a more secure and prosperous financial journey. Get In Touch Sources: Atomic Habits, James Clear, 2018 The views expressed represent the opinions of Breakwater Capital as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed. Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website, www.adviserinfo.sec.gov. Past performance is not a guarantee of future results.

How broadening your trust network makes you a better investor and offers greater peace of mind. Whether planning on your own, attending to your entire family’s affairs or operating your own business day to day, the financial responsibilities requiring your attention may feel like they are a full time job. That may not be much of a stretch as budgeting, paying bills, saving and investing all require a tremendous amount of discipline and this is before you even get to tax and estate planning. From the mundane to the transformative, the idea of having an objective partner or sounding board is comforting. In some instances, consulting with your spouse, a close friend or even a co-worker will suffice, but there are many decisions where enlisting the services of a financial/advisor is a wise choice. But how do we know it’s worth engaging that expert? You rarely here people question the merits of visiting their doctor to address a health issue or a skilled tradesmen to tackle an important project at home, but there is often hesitation or second guessing when it comes time to seek real financial advice. Trust and confidence are the key to any great relationship. The inner circles we cultivate are those few people that we would trust with just about anything, a privilege earned over the course of time. Maybe we are fortunate enough to have real experts in our lives, whether that be health, career, relationships, or finance, but in a world drowning in puffery and self-adulation, everywhere we turn someone has some “wisdom to impart.” Sometimes these “experts” are exactly that, experts – other times, not so much. If your sister is a board-certified pediatrician and you need help with a toddler’s ear infection you are on the right track. If your neighbor, the landscaper, is constantly talking to you about “can’t lose” stock ideas, run! So how do I go about finding an expert in the field of finance? Or better said, who should you trust with your financial future? The short answer is – someone who has relevant professional experience and that has your best interests at the forefront. Maybe you are fortunate to have someone in your inner circle who fits the bill, if so that’s great, but for most of us, we need to seek out professional help elsewhere. Have you ever wondered if you should pay off your mortgage early? What changes should you make to your investment strategy given the state of the economy? Should you be contributing money to a Roth 401k or the more standard tax-deferred 401k? Should I be gifting now or waiting until later when I am entirely confident I won’t outlive my assets? Do any of these sound familiar? I can see your nodding your head that you may not feel confident enough to answer them on your own. We all want to identify the ten-bagger investment, but much like winning the Powerball those are long odds. Sometimes the value you get from your advisor comes from their ability to help you avoid money mistakes both large and small. The best version of this relationship is a “two-way street” where the advisor is not just responding to your inquiries but making proactive suggestions or anticipating your future needs. Expertise and Knowledge: An experienced financial planner is trained in various aspects of personal finance, including investments, retirement planning, tax strategies, estate planning, insurance and more. Planners can provide valuable insights and recommendations based on their expertise and a client’s specific situation. Ideally, they have been through a number of market cycles and have an understanding of both markets and investor behavior, Customized Financial Planning: A financial advisor can create a personalized financial plan that considers your specific goals, risk tolerance, financial circumstances, and time horizon. You are unique, it’s perfect acceptable to expect a solution that is not cookie cutter. A tailored approach can help you identify goals both large and small which will inform decisions along the way to help you work toward your financial objectives. Investment Management: Most individuals & families need help managing their investments, financial advisors can offer guidance on asset allocation, diversification, and selecting appropriate investment products. Advisors also provide ongoing portfolio rebalancing and reallocating as conditions in the world financial markets and economies change. Investment portfolios need to be dressed for the right season just like we do. Risk Management: Financial advisors can help you assess and manage countless financial risks. Risks that can impact a plan, range from investment risk, early death, disability, inflation, excessive spending/withdrawals, and everything in between. Retirement Planning: Planning for retirement is a complex and critical task. Financial advisors can assist in creating retirement income strategies, estimating retirement expenses, and optimizing Social Security and other retirement benefits. Tax Efficiency: Advisors can help you implement tax-efficient strategies to minimize your tax liability, such as taking advantage of tax-advantaged accounts, tax loss harvesting, leveraging municipal bonds and strategically realizing losses to minimize taxable capital gains. Emotional Support: During turbulent financial times, a financial advisor can offer emotional support and help you stay focused on your long-term financial goals, whether uncertain times, helping to prevent impulsive decisions and short-term thinking. Estate Planning: Having a thoughtful plan for your affairs when you are gone can create streamline winding down your affairs reduce costs and possible family friction when it comes to your assets and wishes. Your advisor should be able to lay out different options for you to feel your values outlive you. Education and Empowerment: A good financial advisor not only provides guidance but also educates clients about financial matters, helping them become more financially literate. The importance of a financial advisor depends on your individual circumstances and needs. If you’re uncertain about your financial situation or have complex financial goals, consulting with a qualified financial advisor can be a wise decision. It’s essential to research potential advisors, consider their credentials and fees, and ensure they are a good fit for your specific financial situation and objectives. Ideally, a financial advisor will act as a fiduciary. A fiduciary is a legal term that essentially means that the professional is obligated to act for a client’s benefit, not their own. Starting with someone who is a CERTIFIED FINANCIAL PLANNER or CFP® for short, is a great place to start.  Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website, https://adviserinfo.sec.gov. Past performance is not a guarantee of future results.

“What are you wearing? Dress or suit? Either way, that power looks so good on you.” Cue Barbie’s new intro song. I admit, I recently saw the Barbie movie, while I was excited to take a stroll down memory lane, I wasn’t really sure what to expect. I promise there won’t be any spoilers in this piece. After 90 minutes, I came away feeling more than just a little amused; there was a clear message of confidence and independence, something we all aspire to in life. In the lead up to the matinee, I was having flashbacks, playing with Barbies many unrealistic expectations that came with comparing myself to an impossible body type and thinking “you have to have it all, at once, always”. After watching the movie, a more pragmatic quote came to mind from a very influential female : “You can have it all, just not at the same time”. As a financial advisor, I work with all kinds of clients and my goal is to meet them where they are. Some clients are focused on every little technical detail i.e. P/E ratios, Beta and Sharpe Ratios, etc. Other clients are more focused on the high-level plan, trust and the relationship between advisor and client. Regardless, when working with clients, it is extremely energizing to build an unbreakable trust and watch both financial confidence and independence grow. So, what makes the “Barbie Standard” so elusive? How about the fact that Barbie went to the moon before Neil Armstrong, owns the nicest house on the block and always has the perfect outfit? I am still waiting to meet an astronaut who doesn’t see a spacesuit as the perfect “uniform.” And talk about prolific, Barbie has over 200 careers on her resume, it’s about exploring new things and finding your passion. It also illustrates how valuable education can be for upward mobility. Of course, higher education is not free and with the student loan payments about to restart, that is a concern that is front and center for many Americans. Loans hamper students’ savings potential and unfortunately not enough time is spent reviewing the importance of choosing a career that can cover those costs now and into the future. Education does not stop with college, taking a professional development class being offered at work or attending a monthly alumni meeting creates relationships and opportunities you may not otherwise have. In our world financial literacy is the buzz phrase that is usually used to talk about getting young people prepared, but this is not necessarily an age issue, it’s an access issue. You aren’t living in Malibu if you haven’t stepped your game up. So how does Barbie do it? Frankly, in the real world, with real clients, it’s not about trying to live up to some made up standard, it is about helping each one of our clients live their best life. In that same “real world,” women investors and women professionals face unique challenges that should not be ignored. Women live about 4.4 years longer than men. – In general, a long life that is well lived is a good thing, right? Of course it is, if you are prepared for it! Building up financial acumen over a lifetime is critical, based on this stat, at some point women will be the sole decision maker. The wage gap – women are most often the main caregiver to children. According to this CNBC article women make $16,000 less each year because of motherhood which is extremely significant over the course of a career.  Given these headwinds it makes it even more important to understand and execute on some investor basics. First, live below your means – save at least 5% of your take home (after tax) paycheck in an emergency fund and once you get to a comfortable place with your account balance, invest that 5% in a growth asset. Take advantage of all the “free” matching retirement money your company will give you on top of any other benefits that can help you get ahead. Try to get to a point where you are saving 15% or more of your paycheck towards retirement. While you are at it, try to max out your Roth IRA contributions each year too. My husband and I often debate the age-old adage of whether or not “money doesn’t buy you happiness.” Having a career in finance blossomed out of a need to pay my student loans, rent, and other expenses and not wanting to worry if I can afford my next car insurance payment, I wish I could say it was more altruistic than that. Your career will always be a moving target and you really have to ask yourself what you can do to better allow you to thrive as well as to save and invest. The more you earn, the more flexibility you will have to try new things that fit better with your personality. That is true independence. To me it is a no-brainer that money buys you independence, peace of mind and to pursue the things you actually love. I come from a place where resources were scarce and was often told there was not “enough”. I made a choice that I do not want to live the rest of my life like that, therefore I have chosen specific, realistic (and some stretch goals) to ensure that reality. I’ll acknowledge, it isn’t all about the money, but it is about what that money can help you accomplish when you have a clear end in sight. It can be simple pleasures like planning a vacation when you know you need a break, being able to afford therapy, to larger goals like saving enough money now to retire at 55 or send 2 kids to college without having to refinance your house. In summary, the main premise of the Barbie movie. She was searching for her purpose in being “Stereotypical” Barbie. If you start with money as the goal, it may or may not fulfill you in the long term, but if you start with understanding what you really want and the end in mind, you will realize what financial independence can offer you with clear stepping stones in how to get there. According to the 2020-2021 report from Strategic Business Insights and MacroMonitor, individuals with a financial plan have nearly 3x the net worth of those who don’t, so work with someone who keeps you honest and realistic while giving you a map of how to accomplish what you want. Get In Touch The views expressed represent the opinions of FIRM as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed. Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website. https://adviserinfo.sec.gov/ Past performance is not a guarantee of future results.

What does it mean to leave a financial legacy? What really goes into it? Leaving a legacy goes well beyond having money left over once you pass away. The objective of this article is to outline some key considerations to structure a successful and long-lasting legacy for both family and meaningful causes. The first step in multigenerational success is defining what you want your family legacy to be. It involves articulating the essence of your family’s values, telling your family’s story, or establishing guidelines that will impact decisions made along the way to benefit future generations. Typically, a legacy plan encompasses three key components: proper planning rooted in family values, wealth management, and philanthropic goals. Failing to have a legacy plan in place can result in unintended consequences, which may undermine your long-term legacy. Developing a well-thought-out set of standards enables you to align advisors, whether they be wealth managers, CPAs or attorneys that can help to position the plan for multigenerational success.  Administration: Successful administration plays a vital role once you have clearly defined your goals and objectives within your family legacy plan. It serves as the essential guiding force, or North Star. Articulating control and oversight in a careful manner is necessary to maintain focus on your long-term goals and prevent unintended problems along the way. It is important to communicate with family members or close friends, clearly outlining your objectives to everyone involved. Begin with the end in mind: To achieve the best outcome, envision what future success looks like and then work backward from there. Working through a closely aligned team of advisors, and proper monitoring can ensure that everyone involved has a comprehensive understanding of your investments, philanthropic plans, and family values even years down the line. Experience has shown that your game plan will require ongoing attention, review, and appropriate updates over time. Without this discipline, your original intentions may fade, your philanthropy goals may go awry, and your investment plan may cease to reflect your beliefs and values. Assembling a Team: Building the right team to execute the plan is crucial. For most families, a small team with a high level of skill and integrity will suffice. Having trust in the team that you select is imperative. Engage in focused discussions with each advisor to understand their role, compensation, and how they will collaborate with other advisors. An effective team provides checks and balances and eventually becomes your advocates and will help to identify and will speak up if any problems arise within your agenda. When selecting a firm with broad advisory capabilities, ensure you have a team of experts, get to know each member individually, and maintain regular updates as part of your own checks and balances. Find advisors whose interests and strategies align with yours. Incompatible strategies can be detrimental to the plan, as some advisors’ incentive structures will not align with your goals. Inquire about all forms of compensation, both monetary or otherwise, generated by the advisor’s business across its platform, including direct and indirect revenue streams. Advisors who are not transparent about their business model may not be worth considering. Understanding investment structures, models, and the motivations behind them will provide you with an important perspective when shaping your policies. Investment management: Selecting an investment strategy requires understanding and articulating your risk goals before considering returns. Clearly defined guidelines should be implemented to prevent unintended outcomes and the inclination to pursue greater investment complexity. It is possible that having too many good ideas can lead to diluting investment returns, inflexibility, high costs, and inefficiency in asset allocation over time. It is essential not to invest in ways that you do not understand. Assessing your portfolio will help you understand your overall exposures. Worthwhile investment choices will present themselves over time, allowing you to be selective, take your time, and exercise patience. The model for an investment advisor should include significant skill, experience, aligned principles, and clearly articulated conflicts, if any exist. They should provide thoughtful counsel and conduct rigorous research, due diligence, and demonstrate a repeatable process. Firm size, depth of planning and a business continuity plan are also critical factors for enduring success. Taxes: Taxes are a silent killer of investment returns. Looking through the tax lens to function as a check and balance on the investments will help you to actually keep more of the growth of your investments over time. Managing taxes within portfolio allocations, maintaining a separate tax accounting of yearly transactions can help ensure compliance with your plans. However, it is crucial not to let taxes drive your investment plan. A well-functioning team should collaborate throughout the year and provide appropriate recommendations for gifting, realizing gains or losses, and analyzing income tax efficiency. Estate Plan: Your estate plan represents your legal legacy, and it is essential to get it to represent your true goals. Your estate plan governs the transfer of assets across multiple generations and will be essential to accomplishing all of your charitable ambitions. You should determine the optimal structure for your capital to align with your legacy plan. Consider leveraging a family foundation or establishing separate trusts for future generations with longer time horizons if appropriate. Reviewing this plan every 3-4 years is advisable. Your investment manager and estate planner should collaborate to ensure implementation and the most suitable registrations for holding different investments. Philanthropy: Philanthropy may be a significant factor in your long-term legacy. Many families seek to strengthen family unity and leave a lasting impact through philanthropy. Determine if existing programs align with your goals or if it is necessary to build your own. In today’s philanthropy landscape, there are innovative structures and sophisticated data analytics available to achieve higher levels of impact. Apply the same alignment of values, rigor, and diligence to your philanthropic endeavors as you would to your investment management program. In conclusion, leaving a legacy is a profound endeavor that goes far beyond the simple accumulation of wealth. This article has shed light on the various aspects involved in structuring a successful and enduring legacy for one’s family and causes they hold dear. By developing a well-thought-out set of standards and engaging the expertise of advisors, individuals can position their legacy for multigenerational success. Ultimately, leaving a legacy is about making a lasting impact, ensuring that the values and aspirations of one’s family and the causes they champion continue to thrive for generations to come.

Estate planning matters whether you’re 32, 62 or 92 years, though for many it can be overwhelming both not knowing where to start or what to prioritize. Surely, we all know people that spend countless hours planning their next vacation or agonizing over where they are going to dine out this weekend, yet the thought of outlining their final wishes gets little attention.  At Breakwater Capital Group, it’s safe to say, we feel that having a plan to protect our interests and our loved ones is quintessential. Leaving this to chance or neglecting it all together can cost those left to pick up the pieces both time and money. Not to mention, other unintended consequences, which may have been avoided or minimized had we put in the effort. To be clear, you don’t need a fancy house or a sizable net worth to have an estate plan. And even if you haven’t accumulated much yet, it may actually mean there is an even greater sense of urgency in establishing a plan earlier in life depending on your circumstances. We put together a list of 8 key elements that are a part of a basic estate plan, with the hope this is quick education and a little nudge. Here goes: 1. Will – A will is a legal document that outlines how your assets and property should be distributed upon your death. It allows you to name beneficiaries, appoint an executor to handle your estate, and designate guardians for minor children, if applicable. This is the backbone of your estate plan. 2. Power of Attorney: A power of attorney grants someone you trust the authority to make financial or legal decisions on your behalf if you become incapacitated or unable to manage your affairs. There are different types of power of attorney, such as a durable power of attorney, where the appointed agent can act on your behalf without conditions or a springing power of attorney, which becomes operative with a triggering event, like a doctor’s note indicating diminished capacity. You can appoint a power of attorney at any age though it’s more common with the elderly, just make sure you trust your appointee. 3. Healthcare Proxy or Medical Power of Attorney: This document designates someone to make medical decisions for you if you are unable to do so yourself. It allows you to specify your healthcare preferences, such as end-of-life care or organ donation. It’s important to have a discussion with the trusted individual who will serve in this capacity. 4. Living Will: Also known as an advance healthcare directive, a living will expresses your preferences regarding life-sustaining medical treatments and interventions if you are in a terminal condition or persistent vegetative state and cannot communicate your wishes. This may be tucked into your Healthcare Proxy or may be a standalone document. 5. Trusts: A trust is a legal arrangement in which you transfer assets into an entity expressly created for a certain purpose. The trust has three key players, the roles can be handled by the same individual serving as all three or may have three different parties. Grantor/Donee: The individual that funds the trust. Trustee: The individual responsible for the administration/management of the trust. A trustee is a fiduciary, whose duty of care is to the trust’s beneficiary. Beneficiary: The person(s) that stands to benefit from the trust, they may have an income interest or access to the trust’s principal for certain purposes Trusts come in all shapes and sizes, they can help avoid probate, provide privacy or asset protection, allow for more control over the distribution of assets and help minimize taxes in some instances. Common types of trusts include revocable living trusts, irrevocable trusts, and testamentary trusts. 6. Beneficiary Designations: Certain assets, such as life insurance policies, retirement accounts, bank and brokerage accounts, allow you to name beneficiaries who will receive those assets directly upon your death. Ensuring that beneficiary designations are up to date is an important part of estate planning. An inexpensive solution for who gets what. 7. Guardianship Designations: If you have minor children, it is crucial to name guardians who will care for them until they reach the age of majority, should you pass away or be incapable of caring for them. Oftentimes there is a section in the will devoted to custody or guardianship, though it may also be a standalone document. 8. Letter of Instruction: While not legally required, a letter of instruction can provide guidance to your loved ones regarding your funeral arrangements, the location of important documents, passwords, professional contacts like your wealth advisor, attorney, and tax accountant and other details that may not be covered in formal legal documents. Every estate plan is by definition unique, just like our DNA or fingerprints. That said you may opt for some basic documents and simplicity or look to create a more highly individualized approach depending on your circumstances, goals, and applicable state laws. This isn’t meant to be “here’s a to do list, you’re on your own”. We are here to help as we have traversed this topic frequently over the years and we can offer helpful insights. As you begin working with your trusted wealth advisor, we’ll start by identifying your priorities and frame an outline of what that plan may look like. That way you are prepared for a more fruitful discussion when you formally engage with an estate planning attorney to start ironing out the specifics and implementing the plan. Being better prepared and likely saving a couple dollars along the way, seems like a good use of your time.…

Mortgage rates are up…but you probably already knew that, if you have read, watched or listened to any media outlet over the past few months. The real estate industry would give the advice to “marry the home, date the mortgage”, in the hopes that they can keep demand up. It is possible that the Fed will reduce rates at some point, but that will only happen if inflation is under control or the economy tips into a recession where some monetary stimulus would be warranted. The age-old advice to live below your means and to only buy something if you can afford, holds as true today as ever In general there are two ways to borrow, first with fixed costs, think your traditional 30 year mortgage where the rate you pay is locked in over the term of the loan. The second way is with a variable cost structure, so as rates rise and fall the interest you pay goes up or down with it. Here are some examples of debts or loans with variable rates where those higher rates can impact budgeting and saving and lead to greater delinquencies or defaults: Adjustable-rate mortgages (ARMs): These are mortgages with interest rates that fluctuate based on changes in the prevailing interest rate. Mortgages like these often offer a lower fixed rate to start, but then can adjust upward with prevailing rates typically annually. Some of these loans have annual adjustment caps, limiting the increase from year to year or an overall cap on how high the rates can go. Many of these rates were in the 3% territory for the last decade, they are being reset north of 6 or 7%. Home equity lines of credit (HELOCs): These loans allow homeowners to borrow against the equity in their homes. For example if you bought a home for $400K that is now worth $500K, you may opt to tap into that appreciation to cover renovation projects or educations expenses. HELOCs typically have variable interest rates, these loans generally have a floor rate that the banks will charge to borrow but variable rates that reset as often as their benchmark rates (SOFR) change. Credit card debt: Credit card interest rates are typically variable, with many rates today north of 20%. As a result, carrying credit card debt becomes more expensive and is considered one of the worst types of debt to maintain. Generally, the first bit of financial advice a planner will suggest is to retire the credit card debt. Many financial predicaments arise from ballooning credit card debt. If you have a $10,000 balance the annual interest may very well be north of $2,000. Making just the minimum payment is often a slippery slope. Personal loans or lines of credit: Some personal loans have variable interest rates, which means that they can become more expensive to repay as rates rise. These loans may be for starting a small business or for a home renovation where the house doesn’t have much equity at present. In addition to generally higher rates, these loans are generally recourse loans so your personal property is the collateral. You may be able to borrow directly from a bank or use your assets for collateral, though you investment assets cannot be used as collateral to buy securities. Workplace Retirement Plan Loans: 401(k), 403(b) and 457 plans may offer loan provisions whereby you are able to access a portion of your vested balance of your retirement account. Usually capped at the lesser of 50% of the vested balance or $50,000 these loans allow you to take a loan for general purposes where the repayment period can be no longer than 5 years or for a home loan which will allow a 30 year term. The latter will generally require additional documentation. Here you are paying back yourself, typically at rates close to where rates are at the bank. There are a few potential downsides, you are typically selling securities in the account to fund the loan balance, missing out on any potential appreciation of those dollars and the loans are repaid through payroll deductions which can impair cash flow. Most importantly many of these loans must be repaid within 90 days of separation of service Margin: A form of borrowing associated with one’s investment accounts, here an investor typically has borrowing power equivalent to 1/2 of the accounts value. For example, an investor with $500K can borrow approximately $250,000. Margin loans are easy to apply for and have no application fees they however have a greater degree of risk assuming you are borrowing close the permitted limit and markets or individual holdings may be variable. Tread lightly here, these are best used as bridge loans in our experience. If you have more than one balance outstanding, there are two common approaches to debt repayment and they are as follows: 1. The Avalanche method – This method is where you make minimum payments on each balance and take any other money that is earmarked for paying down debt and put it toward the balance with the highest interest rate. 2. The Snowball method – This method is where you make minimum payments on each balance and take any other money that is earmarked for paying down debt and put it toward the smallest balance. The idea with this method is to quickly payoff one balance, so that monthly obligation is eliminated, and that monthly amount can be focused on the next smallest balance, until all debt is paid off. This approach makes a lot of sense when the interest rates across the various borrowings are very similar.  Both methods are good strategies to help you reduce monthly expenses and avoid getting trapped in a cycle of debt. So what to do now… Money market rates at present are attractive when compared to rates on cash over the last 15 or so years – the problem is that none of us live in a vacuum. Inflation is at its highest level since 1981 which means cash, even at 4%+ isn’t the answer other than for near term expenses or that ever important emergency fund. CD rates may offer slightly higher rates because you are locking the money up for a period of time, sure they may look good now but not when compared with MUCH higher credit card rates. As the cost of living continues to increase, servicing your debt can be a significant burden on one’s finances and limit the ability to save for the future. While paying off your high costs debts should be the top priority, we would encourage you to simultaneously build up, an emergency fund. Having the “rainy day” fund is crucial for unexpected expenses, such as job loss or medical emergencies, which can happen at any time and seem to surface at the worst possible moment. Without an emergency fund, individuals may have to rely on credit cards or loans to cover these expenses, further compounding any issues. Financial planning comes in many forms and great planners can help across a range of financial decisions. Planning is often focused on the big life events like retirement, estate planning, divorce or college funding for a child but the reality is that there are MANY small decisions at every stage that can make an outsized difference. That’s a good primer for understanding the credit markets and there are additional more complex debt structures beyond the scope of this discussion, it’s safe to assume leverage can be both a real asset when used wisely and an even greater liability when not, try your best to not over-extend.