Michael Lecours, CFP

Ohanesian / Lecours Sponsors Connecticut Forest & Park Association’s “Run For the Woods”

By Michael Lecours, CFP September 23, 2015 In Uncategorized

Over the weekend, Ohanesian / Lecours sponsored a 5k and 10k trail run at Sessions Woods in Burlington. Proceeds from the fundraiser go to help protect Connecticut’s forest and the hundreds of miles of trails that run throughout the state. Interested in learning more about CFPA? Learn more here.

Our very own, Erika LeBaron came in second place in the 10k for her age group and won top spot for “Best Fundraiser”. My wife, Jess was the second female to cross the finish line and won her age group in the 5k! Here are a few pictures from the day.

Exciting Changes at Ohanesian / Lecours

By Michael Lecours, CFP September 22, 2015 In Finding Confidence, Uncategorized

Our staff at Ohanesian / Lecours is growing. Leia Caponegro recently joined the firm as a Client Service Support specialist. She has a lot of responsibilities and clients will likely hear from her soon (if they haven’t already). Currently, she is assisting clients who are now required to take a Required Minimum Distribution from their IRA. She brings a wealth of experience and we’re happy that she joined our team!

Why the American Dream For Younger Generations Isn’t Dead

By Michael Lecours, CFP August 27, 2015 In Finding Confidence, Uncategorized

Investor’s Business Daily recently wrote an article entitled “Is The American Dream Dead for Millennials And GenX?”

The article paints a bleak picture for younger generations and backs it up with some supporting research in an effort to make a convincing argument. The premise is this: the recession forced younger generations into lower paying jobs that will affect them for decades and they are forced to take on more debt which will be an added burden for decades to come.

This is a great example of the media trying to scare us. Yes, every generation has its issues and some of today’s younger generations have to deal with the effects of starting their career during the recession. The article doesn’t go into the lessons these generations have learned, such as being more cost conscious. Or how that could benefit them down the road.

A line in the article reads “The Silent Generation, those born from 1925 to 1942, “did the best of all because they lived in the golden era of economic growth”. But in many cases their careers got started shortly after the Great Depression. What’s preventing the struggles of today’s younger generations from fueling them and propelling them to a new level of wealth?

We’re seeing increased innovation and scientific breakthroughs on a daily basis. The world economy is more accessible than ever before, allowing billions of people to connect. The internet is igniting our imagination to think and operate on levels that older generations couldn’t even dream of. Despite what we hear in the news, the world is safer, healthier, and wealthier than ever before.

To me, the American Dream is far from dead. I believe that younger generations will continue to push the boundaries and make the world and their own lives better.

Social Security Discussion

By Michael Lecours, CFP August 26, 2015 In Economy, Investment Strategies, Retirement, Uncategorized

CNBC posted an article online yesterday about how to collect social security. It’s over simplified and generalizes the issues and concepts. The interesting part was the number of comments the article received. Close to 600 comments over the last 36 hours! It was scary to browse through these comments to see all the misinformation that was being spread among the commenters.

If you’re thinking about Social Security, or have questions, talk to us. We can help to think through the issues with you and help you avoid some of the common mistakes folks make.

How to Save for Retirement When You Can’t Work Longer

By Michael Lecours, CFP August 12, 2015 In Investment Strategies, Retirement, Uncategorized

When working longer is no longer an option, it is time to develop strategies to maximize your remaining resources. A combination of planning, adapting and downsizing may be the best course.

Evaluate the Situation

At age 60 or so, life has usually simplified. Children are gone by now and expenses have become more predictable. Since Social Security is still on the horizon, you must find ways to create income from what remains. A realistic draw-down strategy and a workable budget are critical to a comfortable retirement.

Reduce Expenses

If your budget prohibits maintaining your prior lifestyle, expenses must be reduced. Many retirees enjoy creating economical solutions to everyday activities. Senior discounts abound while shopping for auto insurance and other products designed for seniors will lower expenses. Perhaps you could even cut the cord to cable TV.

Housing Options: Downsize, Reverse Mortgage or Line of Credit

Downsizing to a smaller, less expensive home is an option. You’ll save on mortgage, taxes, insurance and utility costs. You may also withdraw equity from the sale of your original home.

A reverse mortgage can be an option if you prefer to stay where you are and have substantial equity. You can remain in your home while the bank pays you a monthly payment to own your home after you are gone.

Tax Consideration for Retirement Accounts

Before Social Security starts and you have little or no taxable income, the early period is a great time to convert 401ks and Traditional IRAs into Roth IRAs. In doing so, you convert all your retirement assets into accounts from which future withdrawals are tax free. This minimizes the tax burden from the conversion.

Delaying Social Security

If your resources allow, delay Social Security as long as possible. Each year you delay beyond 62 increases your benefits substantially. And if you can wait until 70, the benefits increase by 8% each year past the defined retirement. If Social Security benefits are due for both individuals, it may be practical to draw from the lesser account at retirement age and allow the other to grow to the maximum at 70 years of age.

Annuities

In the current low interest environment, payback on annuities is historically low. However, when interest rates rise, these insurance company-backed policies that you purchase can guarantee a fixed payout for the rest of your lives.

If you’re approaching retirement and concerned that you haven’t saved enough but know that working longer is out of the question, there are a lot of options to consider. Start with looking for ways to reduce your expenses. That will have the greatest affect. Hopefully, a combination of these strategies can make up for the difference.

The Myth of Putting All Your Eggs in One Basket

By Michael Lecours, CFP July 16, 2015 In Asset Allocation, Finding Confidence, Investment Strategies, Retirement, Uncategorized

We’ve all heard not to put all our eggs in one basket when it comes to investing. Most of us would agree that sure, it’s good to have diversification but it seems like this concept of diversification has become misunderstood.

When someone says to me “I don’t want all my eggs in one basket,” they are saying they want to spread their risks out. An investor that invests only in the US stock market is putting all of his eggs in one basket. An investor who invests only in bonds is putting all of her eggs in one basket. They aren’t diversifying their portfolio and as a result are taking on risk.

Some investors make a mistake and think they are diversifying their investments, but in reality the opposite is more likely. Here are a few examples to consider:

Common Problems of Improper “Diversification”

Multitude of Accounts: If an investor has a lot of different assets in different accounts it may be hard to track them all. They receive multiple statements in the mail and have to navigate different custodians when they need to make changes. It could cause confusion particularly around tax time. It becomes an administrative issue.
Tax Impact: Having multiple accounts may cloud one’s view of tax consequences. They could be dealing with gains and losses in different accounts. If not coordinated, an investor could be paying more in taxes than needed. We refer to this as a tax loss harvesting strategy, where we sell investments at a loss to offset ones we’ve sold for a gain.
Similar Underlying Investments: A common situation occurs when an investor has multiple mutual funds from different fund companies, thinking they are diversified. But in reality, those funds may own the same or similar underlying investments. The investor may be putting all their eggs in one basket and not even realize it. Similarly, we see investors who own utility stocks and income oriented mutual funds. When we dig into the holdings of the mutual fund, we aren’t surprised to see it comprised of utility stocks, as well. Again, the investor is putting a lot of their eggs in one basket.
IRA RMD: Required Minimum Distribution (RMD) can be a massive headache if you haven’t consolidated your IRAs or 401(k)s. Missing an RMD (or not taking it out) can result in a 50% penalty.

Get Rid of Unintended Risks

As we’ve seen, the myth of diversifying assets can be misleading. It’s important to understand the true implication of diversification. Knowing how to invest properly by getting rid of unintended risks and allocating your retirement portfolio can give investors peace of mind and confidence in this present economy.

Should I Pay Down Debt or Invest in the Market?

By Michael Lecours, CFP July 8, 2015 In Investment Behavior, Rule of Thumb, Saving, Uncategorized

As individuals approach retirement they often ask themselves what they should do to maximize their income. Specifically, they may wonder if they should pay down their debts (credit cards, auto loans, or a mortgage) or should they invest more in the markets. The answer is often times more complicated than they expect.

Exploring Investments

It’s important for investors to understand what the after-tax cost of borrowing is, especially when a mortgage with interest rate is involved. It’s possible that after-tax returns can be higher than after-tax cost of debt. Borrowers who pay a low interest rate are in a better position to invest. Other factors that determine whether or not someone should invest instead of pay down debt favor the entrepreneur and people who are willing to take risks. An investor with a loan costing them 2% per year may want to keep that debt and instead invest in the market if they think they can get 5%-6%.

Managing Risk

Risk is determined by several factors such as age, income, time frame, market activity and taxes. Most experienced investors are aware that equities can be high risk assets. A leading factor that favors investing is high disposable income, which allows for higher risk tolerance. If we revisit the above example, the investor does run the risk of investing in the market in a bad year. In that case the investor still has to service the debt, but also watch their portfolio decline in value. The higher the interest rate on the loan, the more risk the investor takes that the return on the investments will not beat the interest rate.

Paying Debt & Cash Flow

Even though debt seems like a bad word, it is helpful to a credit score to have a certain amount of debt or credit history. The first priority should be saving up six months worth of monthly expenses as part of an emergency or safety net fund. Once this fund is in place, excess money can be used to pay down debt or invest. The main barometer for deciding between debt and investing is debt-to-income ratio. If the ratio is high, paying debt is usually the wiser choice. Tight cash flow is a red flag that budget cuts will be needed.

With low interest rates like we’ve seen, now is a good time to review your situation.

How to Avoid the Biggest Mistake When Starting Social Security

By Michael Lecours, CFP June 25, 2015 In Investment Behavior, Investment Strategies, Retirement, Uncategorized

The media is causing millions of Americans to make a serious mistake when it comes to social security collection strategies. We see articles that discuss ways to “maximize” the social security benefit using clever, new methods such as the “file and suspend” approach. But they completely miss the ball on the most critical issue. They do not stop and ask what your GOALS are for Social Security, which should be the discussed first. Only then should specific strategies be evaluated. Here are a few goals to consider:

We want to retire at a specific age and start collecting social security
We want to start claiming benefits as soon as possible
We want to maximize the income over the years we have together
We want to minimize any decline in income for the surviving spouse
We want the surviving spouse to receive the maximum annual benefit
We want to maximize the survivor benefit (and receive income early)

Once you know your goal, then you can move to the next step and decide how should you collect the benefit. Maximizing the cumulative benefit is just one goal and may be a poor choice once you take the time to compare them to other options.

Steps to Take After Graduating College to Get Your Financial Life in Order

By Michael Lecours, CFP June 19, 2015 In Economy, Uncategorized

Graduating from college can be as much a source of anxiety and dread as it is pride and joy—even students leaving the harshest, most exacting academic programs can feel some level of worry about the future stretching out before them. But fear not—our step-by-step guide will ease the burden by helping you get your financial life in order and engage the ‘real world’ on your own terms.

Make a budget you can live with.

Budgets are the core of financial planning, so that’s where you should start. Don’t fall for the trap so many young people do; saving doesn’t have to be all or nothing; if your current financial situation only allows for minor savings, that’s still better than not saving at all. Create a budget you can live with, with proper allowances for entertainment AND saving, then stick with it. And don’t forget, the little expenses add up over time!

Start investing.

You might be tempted to delay saving for your future (a house, or retirement) until you get a raise in a few years. That’s a trap. Take advantage of employer match in a 401(k). The compounding effects that happen by saving early will help you tremendously in the future.

Start paying your loans down quickly.

If you’re lucky enough to lock in a loans with low interest, it’s ok to pay the minimum amount. But if you have private student loans, or loans with high interest rates (more than 5%), consider paying them off sooner—the faster you clear them from your ledger, the better off your finances will be moving forward. We can help to advise you on the most appropriate strategy.

Put together a career development strategy.

When you’re young, your career serves as the vital engine driving any financial planning you make—so make sure you’re making the most of yourself. Figure out where you want to be and how you intend to get there, then start making it happen.

Start keeping yourself informed.

The last step of getting your financial life is one which lasts forever: Get informed, stay informed. You’re participating in the financial world now, so keep tabs on it: talk to a financial advisor, subscribe to a finance blog, and pay attention.

Steps to Take After Leaving a Job to Get Your Financial Life in Order

By Michael Lecours, CFP June 18, 2015 In Finding Confidence, Investment Behavior, Investment Strategies, Saving, Uncategorized

Leaving a job can be a frightening proposal, even if you’re moving up in the world—navigating retirement plan rollovers, lost and gained benefits, pay and cost-of-living changes, and the other variables can feel quite daunting. Fortunately, if you take a moment and relax, you’ll find that a methodical, thoughtful approach makes it all much easier. Today, we’ll help you navigate your way through the financials of leaving a job without getting stressed about the endeavor.

Figure out what you’re losing and what you’re gaining.

Take a close, hard look at the benefits you’re losing as you leave your job, noting the value of stock options, leave time, child-care, insurance, etc. If you’re moving immediately into a new job, you’ll want to evaluate what you’re gaining the same way, for ease of comparison. A firm understanding of the actual value of what you’re losing or gaining is important.

Look into what you can take with you.

Not every valuable benefit vanishes when you leave a job. You might have several decisions to make about more flexible benefits, such as stock options, which you’ll want to go over with a tax or finance professional—the details around these decisions can get quite complex quite quickly, so don’t let yourself drown alone in the specifics of rolling over your 401k to a new plan or an IRA, keeping or selling stock options, etc.

Negotiate to reimburse losses.

If you’ve noted a loss of value in moving to a new job, that information can be useful for negotiating additional pay, benefits, and one-time expense coverage (for relocation, etc.). Otherwise, look to a financial planning adviser for assistance in finding moves you can make to shrink the gap—you may be able to defray relocation expenses with tax deductions, qualify for new credits, etc.

Undertake a thorough self-audit.

When the dust settles, it’s time to conduct a thorough self-audit and see where your income, benefits, investments, retirement savings, and other financial considerations all stand. Make sure to review plans which, while not directly associated with the job you’re leaving, may interact strangely with your new situation—insurance, investments, estate plans, and the like all need a second look over after a major change such as leaving a job. Take your time, get professional financial planning assistance, and do it right, so you can rest assured that your big change is a move in the right direction.

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