The Importance of an Estate Plan: “Transferring Your Wealth and Wishes”

Podcast Details:

Podcast Title:  The Importance of an Estate Plan:  “Transferring Your Wealth and Wishes”
Podcast Series: Financial Literacy Boot Camp
Video and illustrations available on our YouTube channel here.

 

Questions/Issues We’ll Address on this Episode:
In today’s episode we continue the series we started about various case studies that I’ve come across and found interesting.  This week we’ll address the importance of an estate plan.  I think the general consensus from talking to many people is that they associate this level of readiness with something that has nothing to do with the importance of an estate plan.  What is the association?  I’m not going to die right now.  This association is misguided at best, and catastrophic at worst—I believe it is that they feel they have much longer to live and time to address the importance of an estate plan.  It also may be perhaps because they feel they don’t have a lot of assets to raise a fuss about, suffice to say, developing an estate plan is not as much about your date of death as it is about having a say.  Nonetheless, we will discuss what a properly formulated estate plan is really designed to do by using a couple of client case studies that underscore the importance of an estate plan.

  • The Common Misconception (2:25)
  • Giving yourself a Say (5:10)
  • Purpose of an Estate Plan (7:15)
  • Purpose of Probate Process (9:30)
  • Components of an estate plan (12:00)
  • Case Study of Mary (13:50)
  • Case Study of Suzy (16:17)

#estateplanning #wealthtransfer #financialadvice #financialplanning #financialliteracy

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About Me:
Dominique Henderson, CFP® is founder of DJH Capital Management, LLC., a fee-only, registered investment advisory firm specializing in comprehensive financial planning and wealth management.

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#FinancialLiteracyBootCamp

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Finding (and Doing) What you Love to Do

Finding and doing what you love to do starts in your heart–not your head.

Podcast Details:

Podcast Title:  Finding (and Doing) What you Love to Do
Podcast Series: The Maven’s Keys to Financial Contentment
The Maven’s Keys to Financial Contentment is my idea that true financial contentment can be found when an overlap of money and beliefs occur.  Many people ask the question of how to be “financially content” and this is a discussion to uncover those answers.
So last week we discussed what real or true financial contentment is and I broached a subject that I feel obligated to unpack just a bit. Because in order to have this true financial contentment that we are speaking about, you have spend your time doing what you love to do. Many of us can push past what we desire to do out of obligation to others.  But to be truly financially content, your resources (time, talent and treasure) have to be in alignment with what you believe.  This all starts with finding and doing what you love to do.
As children we are dreamers, but we begin to dream less as “reality” sets in as an adult.  But our dreams are the basis for finding what will motivate you towards a particular goal.  This inevitably leads us on a path to finding and doing what we love to do.  So how can we get it back to dreaming?  Because we have to start dreaming again.  We have to stop letting the “status-quo” dominate what we think and feel and ultimately end up doing.  Finding and doing what you love to do starts in your heart–not your head.  Here’s a little formula on how to move forward:
1) Find a Problem:  What problem do you or you feel people have that you have an answer to?
2) Make it a Passion: Think about whether you would solve that problem even if you weren’t compensated (if not, go back and start over)
3) Make it about People:  Then think about 10-15 people you’ve encountered in discussing this problem and/or provided a solution to them.  Are they influential?  (e.g. Do they have others that they talk about this problem to?)
4) Make a Process:  Think about how you could organize your life to deliver these discussions/solutions on an ongoing basis to those people and what it would take in time & effort.
#truefinancialcontentment
#financialadvice
#financialplanning
#behavioraleconomics
#behavioralfinance
#businessplan

About Me:
Dominique Henderson, CFP® is founder of DJH Capital Management, LLC., a fee-only, registered investment advisory firm specializing in comprehensive financial planning and wealth management.

Where to Find Us:

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#FinancialLiteracyBootCamp

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The Retirement Solution: “Finding What You Love to Do”

Podcast Details:

Podcast Title:  The Retirement Solution: “Finding What You Love to Do”
Podcast Series: Financial Literacy Boot Camp
Video and illustrations available on our YouTube channel here.

 

Questions/Issues We’ll Address on this Episode:
In today’s episode and maybe for the next couple weeks, I want to highlight some key takeaways from a few case studies that I’ve experienced in my years of practice around the subject of “retirement solutions”.  In addition to starting my own practice last year, I have had the benefit of serving about 600 families with another firm in the 6 years prior.  From that experience, I helped form several “retirement solutions” with several different financial planning strategies and techniques.  This week, I want to address a few key points that relate to success in determining a “retirement solution”.   This is such an important topic to address, so take the time to listen to see where you fit in.  I think everyone is concerned (or will be) about the amount of money they require to fully retire.  So I wanted to address that issue today.

Interesting Fact:  10,000 baby boomers will retire each day for the next 13 years and they will play a big role in wealth transfer over the next several years!

Take our FREE retirement assessment to see where you stand!

 

  • Challenges to the Retirement Solution
    • Changing Demographics (2:45)
    • The “new” Retirement Landscape (4:10)
    • Investment Environment (5:17)
  • Traditional vs. Non Traditional Retirement (7:50)
  • Case study of Ms. J (9:02)
    • Need to Save/Live Frugally (10:15)
    • Leverage Employer Benefits (15:37)
    • Delay Social Security Benefits (17:50)
    • Love what you do (19:25)

#retirementplanning #socialsecurity #financialadvice #financialplanning #financialliteracy

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About Me:
Dominique Henderson, CFP® is founder of DJH Capital Management, LLC., a fee-only, registered investment advisory firm specializing in comprehensive financial planning and wealth management.

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#FinancialLiteracyBootCamp

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What is True Financial Contentment?

The Maven’s Keys to Financial Contentment is my idea that true financial contentment can be found when an overlap of money and beliefs occur. Many people ask the question of how to be “financially content” and this is a discussion to uncover those answers.

Podcast Details:

Podcast Title:  What is True Financial Contentment?
Podcast Series: The Maven’s Keys to Financial Contentment
The Maven’s Keys to Financial Contentment is my idea that true financial contentment can be found when an overlap of money and beliefs occur.  Many people ask the question of how to be “financially content” and this is a discussion to uncover those answers.
For the last few weeks we have discussed “Financial You” which was all about ASSESSING (identifying the gaps), ADDRESSING (owning your situation), ADJUSTING (changing your behavior) to ACHIEVE your ideal financial situation, I thought it would be appropriate to cover what is meant behind the phrase:  “true financial contentment”.  In this episode, I explore the concept of “true financial contentment” with a diagram I use with my clients in my financial services practice.  Most people might think that financial contentment is all about money.  However, I believer financial contentment is not all about money, and it has more to do with how your BELIEFS intersect your RESOURCES.  My belief is that as you create more and more overlap of your BELIEFS and your RESOURCES (time, talent or treasure) that you will find greater fulfillment and true financial contentment.  (For the illustrated version of this episode, please visit my YouTube channel).
#truefinancialcontentment
#financialadvice
#financialplanning

About Me:
Dominique Henderson, CFP® is founder of DJH Capital Management, LLC., a fee-only, registered investment advisory firm specializing in comprehensive financial planning and wealth management.

Where to Find Us:

Facebook-Icon78-3 twitter-icon youtube google
#FinancialLiteracyBootCamp

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Solutions to the Career Transition Problem with special guest Marques Ogden

Marques Ogden and I discuss the tools needed by young athletes to effectively transition from the gridiron to the boardroom!

Podcast Details:

Podcast Title:  Solutions to the Career Transition Problem with special guest Marques Ogden
Podcast Series: Financial Literacy Boot Camp
Video and illustrations available on our YouTube channel here.

 

Questions/Issues We’ll Address on this Episode:
A discussion of “Solutions to the Career Transition Problem”and the tools needed by young athletes to effectively transition from the gridiron to the boardroom!

Marques Ogden and I continue our conversation on “Solutions to the Career Transition Problem” by having a very candid discussion on the tools he used after leaving the NFL to begin his transition into the business world.  We discuss the development of his thought process, a strategic plan, and a business network to launch his next phase in life.  We also cover in the discussion practical examples on what business owners can do to boost their networks during the start-up phase of their business.  We also discuss ways that young professional athletes should be leveraging their brand with non-monetary “human capital” while still playing.  Last, we cover some statistics provided by the CFP Board on financial literacy and savings rates among Americans.  Don’t miss this exciting episode of “Solutions to the Career Transition Problem” brought you DJH Capital Management.

  • Develop a Strategic Plan (3:15)
  • Develop a Network and Talk to People (4:50)
  • Join your Chamber of Commerce (6:30)
  • Leverage Your Brand (20:30)
  • 80% of Americans concerned about not saving enough…what about athletes? (25:35)
  • How to get out of your “comfort zone”? (28:55)

Helpful Links:

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About Me:
Dominique Henderson, CFP® is founder of DJH Capital Management, LLC., a fee-only, registered investment advisory firm specializing in comprehensive financial planning and wealth management.

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#FinancialLiteracyBootCamp

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Create Tax Free Income for Life with Municipal Bonds

Now that you’ve read the somewhat salacious title of this article, the real question becomes “is there any truth to it”? A second question might be similarly, “what’s the catch”? Well, I hate to disappoint you but there is no catch and it is possible to create a tax-free income stream for life. But how? It is done with an asset that has been around for literally ages—bonds.

 

Now that you’ve read the somewhat salacious title of this article, the real question becomes “is there any truth to it”?  A second question might be similarly, “what’s the catch”?  Well, I hate to disappoint you but there is no catch and it is possible to create a tax free income stream for life.  But how?  It is done with an asset that has been around for literally ages—bonds.

In particular, this strategy can be executed successfully by using tax-free, non-AMT municipal bonds (what is a AMT bond?).  Most investors shy away from bonds because they yield (or return) less than equities and tend to be more complex in nature.  However, the global bond market is larger than the global equity market by $30 Trillion (see here) although the portion we will discuss in this article is much smaller at just shy of $4 trillion.  So, why might you want to invest in municipal bonds to create tax free income for life?

What Are Municipal Bonds

First, municipal bonds represent an “I.O.U” issued by a governmental entity—usually state or local.  They get their “tax-free” status because the money raised by the bond issue is usually for a “public good or service” like schools or roads.  Money raised for these type of bonds are labeled as “general obligation” bonds and are backed by the full, faith and credit of the issuing entity’s taxing power.  Generally speaking, the more taxing power, the better the backing.  The idea behind tax-free interest from the bondholder comes from the fact that many schools and roads are usually funded by a large portion of taxpayer dollars.  Thus, tax-exempt interest was born to incentivize the public to keep paying their taxes to fund projects.  Ok, seems like a good deal, so why not use bonds in 100% of your investment portfolio?

There’s Still No Free Lunch

Well, like it’s been said before “there is no free lunch” and it is no different for municipal bonds. The rules of asset diversification apply even in the compelling case of tax-free income.  Bonds have historically had little correlation to equities except in market crises situations, so creating a portfolio of both equities and bonds makes a whole lot of sense as a long-term investor.  But when considering other fixed income vehicles like annuities or real estate which both generate taxable portfolio interest, individual municipal bonds make a good alternative.  Take the case with your typical annuity (fixed or variable) that carries an average 2-3% annual expense charge when you consider:  administrative, mortality and expense, mutual fund costs.  And although you may not see it, don’t forget there will be a commission paid to the broker that sold you the annuity.  So first year charges, can easily exceed 8%.  Finally, you still have to pay taxes on the annuity income stream on all gains beyond your cost basis.  Alternatively, you can invest the same amount into a diversified municipal bond portfolio and pay no taxes and receive tax free income until the bonds are called or mature.  As an added bonus, your estate will receive a “step-up” in basis at your date of death greatly reducing any potential capital gains.

Why Not Use a Bond Fund?

This is a good question, and the short answer is that individual bonds are actually cheaper and a much more effective way of achieving “tax-free income”.  Similar to annuities (mentioned above), bond funds have both explicit and implicit expenses.  The explicit expenses like marketing, administrative, sales loads, etc. show up in the annual expense ratio.  Granted, you can find a really low-cost index fund, but like actively managed funds, they have implicit costs which are not in the annual expense ratio.  For example, what happens when the fund manager receives new capital in the fund and is compelled to buy bonds in an expensive market, or alternatively faced with selling bonds into a cheap market.  This is referred to as liquidity premium (the former) or discount (the latter).  There is also “cash-drag” where the fund manager may hold extra cash just to satisfy “potential” fund redemptions.  Being a former portfolio manager myself, I realize not all bond fund managers effectively navigate these risks which translate in lower returns to fund investors.

“Buy and Hold”

Not the sexiest, but the “buy and hold” strategy for individual municipal bonds is by far the smartest.  Here’s a brief example of the power of compounding in this article.  Not only do you save the costs and expenses mentioned above, you also greatly reduce many of the risks that run off several other investors thereby creating a golden opportunity for the patient and savvy investor.

Check out these resources:

P.S. I apologize for the infrequency of written posts to my readers.  I’ve used the extra time to work on a book that I hope to have finished later this year.  Until then, enjoy the podcasts and these sporadicly written posts!

 

Financial You – Part 4

A discussion of what I believe is the key to financial contentment!

Podcast Details:

Podcast Title:  Financial You–Part 4
Podcast Series: The Maven’s Keys to Financial Contentment

The Maven’s Keys to Financial Contentment is my idea that true financial contentment can be found when an overlap of money and beliefs occur.  Many people ask the question of how to be “financially content” and this is a discussion to uncover those answers.

What makes up financial you?  Is it your money?  How do you feel about it?  Are you happy?  Are you content?  If you are or aren’t content do you know what is making you feel that way?

I believe a lot of people ask these questions internally, everyday and don’t always have answers.  Here are 4 steps to uncovering answers to those type of questions.
ASSESS, ADDRESS, ADJUST, ACHIEVE
A brief review of the rubric.  These are the questions I believe a lot of people ask internally, everyday.  And so to find those answers we start with an…

Assessment because it identifies the gaps between where we are and where we want to be.  So stop right now for a minute and close your eyes and just think about this:  If you had unlimited resources (money were no object), what would you do?  Because this is how all things work from that place inside you…think about who you love, what you dislike, all your passions.  These emotions emanate from the same place.  So the assessment exercise is huge.

Next you address and own up to these gaps.  You have to own the space between where you are and where you want to go.  You are responsible for closing this gap.  Remember the example about weight loss I have you in Part 2 and Part 3.
Next you make the necessary adjustments.  Going back to our weight loss example–will you diet, exercise or both.  With your finances you have to maybe adjust your spending or save more.
And finally, achievement…which is where we all want to be.  I think it is a simple answer but more difficult in application.  So you have this goal, and in your mind you think you know how to get there.
Often I think our brains can get in the way of our actions, but the key to achievement is in a change in your behavior.
Especially in the first 21 days where you see limited or no results.  But to get to your goal…remember the picture we formed with our unlimited resources…you have to do the work of behaving correctly.

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About Me:
Dominique Henderson, CFP® is founder of DJH Capital Management, LLC., a fee-only, registered investment advisory firm specializing in comprehensive financial planning and wealth management.

Where to Find Us:

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#FinancialLiteracyBootCamp

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FLBC 033: All You Ever Wanted To Know About Municipal Bonds

Podcast Details:

Podcast Title:  All You Ever Wanted To Know About Municipal Bonds
Podcast Series: Financial Literacy Boot Camp
Video and illustrations available on our YouTube channel here.
***LISTENER BONUS****
To receive a complimentary review of your bond portfolio or see bond portfolio samples, click here!

 

Questions/Issues We’ll Address on this Episode:
-What are municipal bonds
-Why they are used in investment strategy or portfolios
-Things to be aware of when considering as an investment

Helpful Links:

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Sign up for more updates like these

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About Me:
Dominique Henderson, CFP® is founder of DJH Capital Management, LLC., a fee-only, registered investment advisory firm specializing in comprehensive financial planning and wealth management.

Where to Find Us:

Facebook-Icon78-3 twitter-icon youtube google
#FinancialLiteracyBootCamp

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Financial You – Part 3

A discussion of what I believe is the key to financial contentment!

Podcast Details:

Podcast Title:  Financial You–Part 3
Podcast Series: The Maven’s Keys to Financial Contentment

The Maven’s Keys to Financial Contentment is my idea that true financial contentment can be found when an overlap of money and beliefs occur.  Many people ask the question of how to be “financially content” and this is a discussion to uncover those answers.

What makes up financial you?  Is it your money?  How do you feel about it?  Are you happy?  Are you content?  If you are or aren’t content do you know what is making you feel that way?

I believe a lot of people ask these questions internally, everyday and don’t always have answers.  Here are 4 steps to uncovering answers to those type of questions.
ASSESS, ADDRESS, ADJUST, ACHIEVE

Sticking with the weight loss analogy…

  • Know the following:
    • it is easier to behave your way into a new way of thinking about your situation than to wait for your thinking to cause new behavior.  Do you think wishing that you weren’t overweight is as effective of going to the gym, signing up for a membership and hiring a personal trainer?  Or better yet, finding a friend that you can go to the gym with to help you in your quest.  Of course everyone would agree that adopting a new way of behaving all the not the easiest or most comfortable is the most effective.
    • What you choose to do becomes less important from the stand point that you now have a new frame of thinking around your current situation that reflects two things:  where you are versus where you want to be.

THIS IS THE POWER IN THIS SECOND STEP OF “ADDRESSING”, BECAUSE IT DRIVES OR MOTIVATES YOU TO ADJUST.  Don’t lose sight of this.

  • After a while the results begin to show.  People will begin to ask if you’ve lost weight.  But the reality is you’ve been living with a change mindset and resulting behaviors for a while.  Cutting down on your trips to Starbucks to buy expensive coffee or whatever else you do that can be curtailed or even eliminated begin to translate in financial “wins” for you on your path to true financial contentment.  All these steps have to take place–Assessing, addressing and now adjusting–in order for you to be more financially content and begin placing your money where your heart is.  This is the overlap of that Venn diagram we spoke about in the first step.
  • So as you think about what you need to adjust, whether that be how much you spend or save, think about where you want to be.  Think about how you have already acknowledged that you are not there and you want to get there, so these are the things that need to change so you can reach your goal.

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About Me:
Dominique Henderson, CFP® is founder of DJH Capital Management, LLC., a fee-only, registered investment advisory firm specializing in comprehensive financial planning and wealth management.

Where to Find Us:

Facebook-Icon78-3 twitter-icon youtube google
#FinancialLiteracyBootCamp

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FLBC 032: Solutions for Fixing the Athlete Fraud Problem

Discussion with Chase Carlson and Jonathan Miller about the fraud problem in the athlete and entertainment world.

Podcast Details:

Podcast Title:  Solutions for Fixing the Athlete Fraud Problem
Podcast Series: Financial Literacy Boot Camp
Video and illustrations available on our YouTube channel here.

 

Questions/Issues We’ll Address on this Episode:
My discussion with Chase Carlson and Jonathan Miller about solutions to fix the athlete fraud problem.

Helpful Links:

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Subscribe to the podcast!

About Me:
Dominique Henderson, CFP® is founder of DJH Capital Management, LLC., a fee-only, registered investment advisory firm specializing in comprehensive financial planning and wealth management.

Where to Find Us:

Facebook-Icon78-3 twitter-icon youtube google
#FinancialLiteracyBootCamp

Sound bumps provided by www.bensound.com