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Category Archives: Wealthy Behaviors

Four Tips for Planning a Vacation with a Toddler

My spouse and I love to travel. Our vacations typically involved a long flight, an exotic location and very few pre-planned activities. It was so relaxing. Sleep in? Absolutely. Kayaking? Sure. Zip line? Why not. Stay in and read a book for the afternoon with an occasional nap. Absolutely!

We nearly always returned home rested. Sometimes, we even reached maximum relaxation at our destination and came home early for a bit more of a staycation, slowly ramping back up for work. It was perfection.

And then our son arrived…

Now, don’t get me wrong; I adore my son. Being Dad is the best and most important job I will ever have in my life. I didn’t know it was even possible to love another human to that degree. Despite that love for our son, eliminating vacations was just not an option for us, so we had to find a way to make vacation a reality with an infant and now toddler, just a month away from turning two! And we did.

Here are a few things we did that made vacation possible again.

  • For flights, less is more. I remember the first flight we scheduled was a three-and-a-half-hour flight. For several weeks prior to the trip, my anxiety level seemed to increase daily. As a frequent traveler for work, I could not shake the vision of the two of us, like parents on many of my recent flights, screaming child in between us repeatedly apologizing while bribing those around us with free drinks. We ended up having to cancel that vacation and made new plans that involved a much shorter flight. And the moment we confirmed our new plans, my anxiety immediately dissipated, and I experienced the excitement and chemical reactions in my body an upcoming vacation can and should induce.
  • Travel during nap time. Although sleep training was complete failure in our house, my son naps for two to two-and-a-half hours daily at roughly the same time each day. During our first one-hour flight, he played for about 20 minutes and slept for the rest of the flight. It may be inconvenient to try and schedule all possible vacation travel in the same two-hour windows each day but trust me: it’s well worth it.
  • Have a staycation before the vacation. We live in LA, roughly 25 miles from LAX. For those of you familiar with Southern California traffic, you are keenly aware that 25 miles can be 30 minutes or three hours depending on the day and time you get in the car. One of our earlier vacations was a three-hour trip and required us to be on the road at a rough time of day. Instead of waking up, packing the car, driving in traffic and just generally being miserable, we booked a hotel at the airport for the night before our flight. It was money well spent and had the added benefit of making the vacation feel longer.
  • Be ready to fill the gaps with screen time. Yes, I know, there are probably people who think we are horrible parents, and who can’t imagine putting an iPad in front of a 14-month old. I’ll take three hours of judgmental looks with a smiling child over three hours of complaining neighbors and a screaming child any day, period.

As I write this article, I am looking forward to our upcoming vacation to Whidbey Island in Puget Sound. Not only is the flight to Seattle a short one, we are flying out of Burbank. I’m already experiencing the benefits of the vacation (and have been since we booked the trip) with the one simple change; avoiding LAX!

If you’re ready to plan your family vacation but having trouble budgeting for it, read on to learn how to juggle multiple savings goals.

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.
Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.
Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services.  Please consult the appropriate professional regarding your legal or tax planning needs.
The views and opinions expressed in this article are those of the author, are for educational purposes only and do not necessarily reflect the official policy or position of Larson Financial Group, LLC or any of its affiliates.

Five Ways to Juggle Multiple Savings Goals

Many doctors may have competing short-term goals; saving for the down payment on their first home, a big vacation, new furniture, etc. Many people are comfortable maintaining one account for their emergency/opportunity fund and directing monies to this account systematically each month or when cash builds up in their checking account.

For others, though, one lump sum of money sitting in an account doesn’t help them to determine whether they can afford each of their goals or even reach their goals to begin with. For those clients, I tend to recommend a strategy of using multiple accounts to accumulate the funds to meet each goal.

If you prefer the multiple account strategy, I have a few suggestions you may find helpful:

  • Determine the purpose of the money. Most people should have an emergency reserve of 3-6 months of income, depending on their personal situation. Start with this fund and list the other purposes.
  • Determine the amount you need for each goal. Write down the expected amount for each goal and be very specific.
  • Determine the time horizon for each goal. It is important to identify when you will need the money, so you can determine how much to set aside each month to reach that particular goal.
  • Determine your monthly excess cash flow. After your fixed and necessary variable monthly expenses, calculate how much money is left over each month to put toward savings goals. I highly recommend a budgeting exercise; however, if you haven’t done one and choose not to do a budget, perhaps you know how much your checking account builds up each month. If so, unless you alter your spending habits, this is your monthly excess.
  • Determine where to put the money. This will vary by person or family depending on income, time horizon and risk tolerance to name a few. If you are incredibly conservative and reaching the goals will be close, multiple accounts that preserve the monies are probably best.

If, on the other hand you are much more aggressive, are comfortable with delaying the goals due to a decrease in principal or have a longer time horizon to meet the goal, you may want to consider other investment options.

It’s important to remember online savings accounts tend to pay a higher interest rate than typical brick-and-mortar banks, so it is beneficial to do some research unless you already have a financial advisor. They should know which options are best or be able to find out for you. Your financial advisor can make recommendations based on your overall comfort and knowledge of investments.

If you’re struggling to juggle multiple savings goals, our advisors can help.

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.
Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.
Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services.  Please consult the appropriate professional regarding your legal or tax planning needs.
The views and opinions expressed in this article are those of the author, are for educational purposes only and do not necessarily reflect the official policy or position of Larson Financial Group, LLC or any of its affiliates.

The Tao of Wealth Management

July 13, 2018

Jim Parker, Vice President
DFA Australia Limited, a subsidiary of Dimensional Fund Advisors LP

The path to success in many areas of life is paved with continual hard work, intense activity, and a day-to-day focus on results. However, for many investors who adopt this approach to managing their wealth, that can be turned upside down.

The Chinese philosophy of Taoism has a phrase for this: “wei wu-wei.” In English, this translates as “do without doing.” It means that in some areas of life, such as investing, greater activity does not necessarily translate into better results.

In Taoism, students are taught to let go of things they cannot control. To use an analogy, when you plant a tree, you choose a sunny spot with good soil and water. Apart from regular pruning, you let the tree grow.

This doesn’t mean that we should always do nothing. In fact, insights from financial science suggest you should direct your investment efforts to the things you can control. These include taking account of your own preferences and sensitivities when choosing investment strategies, diversifying your allocation to moderate the ups and downs, being mindful of the impact of fees, and exercising discipline when emotions threaten to blow you off course.

Successful investing requires taking actions that can have a positive impact on the outcome. For instance, to maintain their desired asset allocation, investors should regularly rebalance their portfolio by reallocating money away from strongly performing assets.

But rebalancing is a disciplined, premeditated activity based on each person’s circumstances. It contrasts with the “busyness” of reflexively following investment trends and chasing past returns promoted through financial media. Look at the person who fitfully watches business TV or who sits up at night researching stock tips. That sort of activity is likely counter-productive and can add cost without any associated benefit. With investing, constantly tinkering with an allocation does not perfectly correlate with success.

Now, while that makes sense, many people struggle to apply those principles because the media tends to look at investing through a different lens, focusing on today’s news, which is already priced in, or on speculating about tomorrow. Guesswork can surely be interesting. But is it relevant to your long-term plan? Probably not.

People caught up in the day-to-day may constantly switch money managers based on past performance,or attempt tactical changes in their allocation, or respond in a knee-jerk way to news events that turn out to be noise.

Again, the assumption underlying these approaches is that if you put more effort into the external factors and adjust your position constantly, you will get better results. Unfortunately, people may end up earning poorer long-term returns from trading too much, chasing past performers, or attempting to time the market. Ultimately, that’s just another reminder of the potential benefits available to disciplined investors who stay focused on what they can control.

As the ancient Chinese proverb says: “By letting it go, it all gets done. The world is won by those who let it go. But when you try and try, the world is beyond the winning.”

Are you ready to talk over your wealth management strategy?

Past performance is not a guarantee of future results. There is no guarantee investment strategies will be successful. Investing involves risks including possible loss of principal. Investors should talk to their financial advisor prior to making any investment decision. Diversification does not eliminate the risk of market loss.
All expressions of opinion are subject to change. This article is distributed for informational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services. Investors should talk to their financial advisor prior to making any investment decision.
Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission.
Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor. Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.
This handout is for Informational purposes only and is an authorized reprint from Dimensional Fund Advisors LP (“DFA”).
Larson Financial Group (“LFG”) and Larson Financial Securities (“LFS”) are separate from and unaffiliated with DFA. LFS has entered into a selling agreement with DFA whereby LFS may sell and receive compensation for the sale of DFA funds. Material is believed current and accurate but is not guaranteed.
Investments are subject to various market, political, currency, economic, and business risks, and may not always be profitable; further, neither LFG nor LFS guarantee financial or investment results.
This material is not to be construed as an offer to buy or sell securities or other products and services of LFG or its affiliates. Before taking action on a financial plan, please review any offering documents available, including prospectus and consult an appropriate investment professional regarding your specific needs. Past performance is not an indicator of future results.

Financial Planning for Physicians

Building a Wealth Plan

Most physicians’ lost wealth potential is not caused primarily by poor investment choices. Rather, it is a lack of coordination across all areas of their financial lives that cause most doctors to give up their greatest potential. There are nine important planning areas that every doctor must address in order to build and implement a properly balanced and coordinated wealth plan.

Areas to Address in a Coordinated Wealth Plan

  1. Cash Flow
  2. Risk Management
  3. Debt
  4. Retirement
  5. Education
  6. Tax Planning
  7. Practice Management
  8. Estate Planning
  9. Asset Protection

A good financial advisor specializes in working with your other professional advisors to put each of these pieces together into one comprehensive and well-managed plan. Physicians often demonstrate that this coordination can literally mean the difference between hundreds of thousands–to millions–of dollars of additional wealth over their lifetimes.

Take for example many clients who have a large balance in their 401(k) or 403(b) plan through their practice. It astounds us that many of these investors have no idea that along with their account balance, their tax burden is also compounding throughout their working years. Without coordinating their future tax situation with their investment decisions today, they could face disaster when they reach their retirement years. We liken this financial coordination to a big jigsaw puzzle. If you correctly place all of the pieces, you can usually get a great outcome, but if just one piece of the puzzle is missing, everything else will get distorted.

In Summary

Our goal is to help you realize that you can go in one of two directions with your family’s financial future.

You can devote a significant amount of your time on a regular basis to stay abreast of financial issues and continue to manage your family’s financial playbook on your own. If you follow this path, do so with extreme caution. Physicians face a “crisis of overconfidence” as it relates to their own financial abilities. Consistent studies document that the more confidence a physician has in his or her own financial expertise, the less likely he or she is to actually be correct in this assessment. (5) (6)

Alternatively, you can delegate this work to a specialized professional so that you can spend your time following your passions, rather than worrying about how to finance them. At the end of the day, our hope is that every physician is being properly served when it comes to his or her financial life–either through his or her own efforts, or through those of an advisor or team of advisors. We want your financial life to be an area of peace for your family, not a source of stress. That outcome will only occur when your financial decisions are properly aligned with the core values you share for your family and when each piece of your financial life is working together in harmony with all of the other pieces.

Have Questions?

5) Unskilled and Unaware of It: How Difficulties in Recognizing One’s Own Incompetence Lead to Inflated Self-Assessments. Dunning, David and Justin, Kruger. Washington, D.C. : American Psychological Association, 1999, Vol. 77. 6) Montier, James. The Folly of Forecasting: Ignore All Economists, Strategists, and Analysts. London, England : DrKW Macro Research, 2005.

Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services. Please consult the appropriate professional regarding your legal or tax planning needs.

Physicians: How to Manage Your Financial Health

The demands on medical practitioners today can seem overwhelming. It’s no secret that  health-care delivery is changing, and those changes are reflected in the financial issues that health-care professionals face every day. You must continually educate yourself about new research in your chosen specialty, stay current on the latest technology that is  transforming health care, and pay attention to business considerations, including ever-changing state and federal insurance regulations.

Like many, you may have transitioned from medical school and residency to being on your own with little formal preparation for the substantial financial issues you now face. Even the day-to-day concerns that affect most people–paying college tuition bills or student loans, planning for retirement, buying a home, insuring yourself and your business–may be complicated by the challenges and rewards of a medical practice. It’s no wonder that many medical practitioners look forward to the day when they can relax and enjoy the fruits of their labors.

Unfortunately, substantial demands on your time can make it difficult for you to accurately evaluate your financial plan, or monitor changes that can affect it. That’s especially true given ongoing health care reform efforts that will affect the future of the industry as a whole. Just as patients need periodic checkups, you may need to work with a financial professional to make sure your finances receive the proper care.

Maximizing your personal assets

Much like medicine, the field of finance has been the subject of much scientific research and data, and should be approached with the same level of discipline and thoughtfulness. Making the most of your earning years requires a plan for addressing the following issues.

Retirement

Your years of advanced training and perhaps the additional costs of launching and building a practice may have put you behind your peers outside the health-care field by a decade or more in starting to save and invest for retirement. You may have found yourself struggling with debt from years of college, internship, and residency; later, there’s the  ongoing juggling act between making mortgage payments, caring for your parents, paying for weddings and tuition for your children, and maybe trying to squeeze in a vacation here and there. Because starting to save early is such a powerful ally when it comes to building a nest egg, you may face a real challenge in assuring your own retirement. A solid financial plan can help.

Investments

Getting a late start on saving for retirement can create other problems. For example, you might be tempted to try to make up for lost time by making investment choices that carry an inappropriate level or type of risk for you. Speculating with money you will need in the next year or two could leave you short when you need that money. And once your earnings improve, you may be tempted to overspend on luxuries you were denied during the lean years. One of the benefits of a long-range financial plan is that it can help you protect your assets–and your future–from inappropriate choices.

Tuition

Many medical professionals not only must pay off student loans, but also have a strong desire to help their children with college costs, precisely because they began their own careers saddled with large debts.

Tax considerations

Once the lean years are behind you, your success means you probably need to pay more attention to tax-aware investing strategies that help you keep more of what you earn. Unfortunately, substantial demands on your time can make it difficult for you to accurately evaluate your financial plan, or monitor changes that can affect it. That’s especially true given ongoing health care reform efforts that will affect the future of the industry as a whole. Just as patients need periodic checkups, you may need to work with a financial professional to make sure your finances receive the proper care.

Using preventive care

The nature of your profession requires that you pay special attention to making sure you are protected both personally and professionally from the financial consequences of legal action, a medical emergency of your own, and business difficulties. Having a well-defined protection plan can give you confidence that you can practice your chosen profession without putting your family or future in jeopardy.

Liability insurance

Medical professionals are caught financially between rising premiums for malpractice insurance and fixed reimbursements from managed-care programs, and you may find yourself evaluating a variety of approaches to providing that protection. Some physicians also carry insurance that protects them against unintentional billing errors or omissions. Remember that in addition to potential malpractice claims, you also face the same potential liabilities as other business owners. You might consider an umbrella policy as well as coverage that protects you against business-related exposures such as fire, theft, employee dishonesty, or business interruption.

Disability insurance

Your income depends on your ability to function, especially if you’re a solo practitioner, and you may have fixed overhead costs that would need to be covered if your ability to work were impaired. One choice you’ll face is how early in your career to purchase disability insurance. Age plays a role in determining premiums, and you may qualify for lower premiums if you are relatively young. When evaluating disability income policies, medical professionals should pay special attention to how the policy defines disability. Look for a liberal definition such as “own occupation,” which can help ensure that you’re covered in case you can’t practice in your chosen specialty.

To protect your business if you become disabled, consider business overhead expense insurance that will cover routine expenses such as payroll, utilities, and equipment rental. An insurance professional can help evaluate your needs.

Practice management and business planning

Is a group practice more advantageous than operating solo, taking in a junior colleague, or working for a managed-care network? If you have an independent practice, should you own or rent your office space? What are the pros and cons of taking over an existing practice compared to starting one from scratch? If you’re part of a group practice, is the practice structured financially to accommodate the needs of all partners? Does running a “concierge” or retainer practice appeal to you? If you’re considering expansion, how should you finance it?

Questions like these are rarely simple and should be done in the context of an overall financial plan that takes into account both your personal and professional goals.

Many physicians have created processes and products for their own practices, and have then licensed their creations to a corporation. If you are among them, you may need help with legal and financial concerns related to patents, royalties, and the like. And if you have your own practice, you may find that cash flow management, maximizing return on working capital, hiring and managing employees, and financing equipment purchases and maintenance become increasingly complex issues as your practice develops.

Practice valuation

You may have to make tradeoffs between maximizing current income from your practice and maximizing its value as an asset for eventual sale. Also, timing the sale of a practice and minimizing taxes on its proceeds can be complex. If you’re planning a business succession, or considering changing practices or even careers, you might benefit from help with evaluating the financial consequences of those decisions.

Estate Planning

Estate planning, which can both minimize taxes and further your personal and philanthropic goals, probably will become important to you at some point. Options you might consider include:

  • Life insurance
  • Buy-sell agreements for your practice
  • Charitable trusts

You’ve spent a long time acquiring and maintaining expertise in your field, and your patients rely on your specialized knowledge. Doesn’t it make sense to treat your finances with the same level of care?

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based up on publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Have Questions?

Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services. Please consult the appropriate professional regarding your legal or tax planning needs.