The Infamous 401(k) Rollover…The Why and The How

You leave a job and you have money in a 401(k) what should you do with it?

Podcast Details:

Podcast Title:   The Infamous 401(k) Rollover:  The Why and The How
Podcast Series: Financial Literacy Boot Camp
Video and illustrations available on our YouTube channel here.

Powerpoint Slides

Questions/Issues We’ll Address on this Episode:

  • There are two buckets of money…qualified or non-qualified (5:00)
  • What is a 401(k)? (6:00)
  • Is it mine?  (6:35)
  • Can I roll this into my new employer’s plan?  (10:35)
  • Can I still participate in my former employer’s plan?  (11:30)
  • How should I invest my  401(k)?  (12:33)
  • What is an IRA?  (15:35)
  • Why would I want to rollover my 401(k)? (17:00)
  • The steps to a 401(k) Rollover (19:00)

 

#financialliteracy #finlit #finance #financialplanning #financialeducation #advice #financialadvisor #money #finances #taxes #tips #retirement #investing #401k #401kplanning

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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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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.

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.

Where to Find Us:

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#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.

Where to Find Us:

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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!

 

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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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

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

FLBC 031: Solutions to the Career Transition Problem

Marques Ogden and I continue our conversation about: “The Career Transition Problem” and how to re-brand and financially empower yourself!

Podcast Details:

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

 

Questions/Issues We’ll Address on this Episode:
Marques Ogden and I continue our conversation about:  “The Career Transition Problem” and how to re-brand and financially empower yourself!

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

FLBC 030: Financial Trends for 2017 & Beyond

Podcast Details:

Podcast Title:  Financial Trends for 2017 & Beyond
Podcast Series: Financial Literacy Boot Camp
Video and illustrations available on our YouTube channel here.

 

Questions/Issues We’ll Address on this Episode:
I  cover trends in investing, fintech, and regulation investors should be aware of.

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.

Where to Find Us:

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

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FLBC 029: Is the Market for Creating or Maintaining Wealth?

Podcast Details:

Podcast Title:  Is the Market for Creating or Maintaining Wealth?
Podcast Series: Financial Literacy Boot Camp
Video and illustrations available on our YouTube channel here.

 

Questions/Issues We’ll Address on this Episode:
Discussion around why the primary purpose of the market may be to preserve and not create wealth.

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.

Where to Find Us:

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

Sound bumps provided by www.bensound.com