Posts

, , , , ,

What is Wealth Management?

What is Wealth Management and Is it Right for Me?

Wealth management is a tool used by high-net-worth individuals to plan for their financial future and ensure their assets are being used safely and effectively. It is usually only necessary in cases where a client’s liquid assets exceed $1 million and their financial situation has complex, specific complications requiring specialist knowledge to navigate.

Key Takeaways

  • Wealth management is a set of services designed to grow assets safely, avoid costly setbacks, and minimize future financial obligations.
  • These services are typically only needed by high-net-worth individuals with more than $1 million in liquid assets.
  • When choosing a wealth manager, be sure to find a person or firm with experience relating to your specific needs. Specialization is key when it comes to challenging, complex financial situations.

What is Wealth Management 

 Wealth management is the means by which your money can be leveraged to generate more wealth as safely as is possible. This is accomplished by making wise investments, understanding how to diversify your assets properly, and planning for your financial future. 

What Does a Wealth Manager Do?

A wealth manager provides a diverse set of services to their clients, utilizing every available resource and technique to grow and protect the assets entrusted to them. 

Much of a wealth manager’s work is preemptive, including long-term financial planning, estate planning, and tax planning. Knowing what to expect in the future is a critical part of this job, and it allows them to make the best choices possible for their clients.

Another key job of an effective wealth manager is offering investment management and risk assessment. This often includes setting achievable goals and striving to meet them amid changing market conditions.

In many cases, a wealth manager will also be expected to provide some general assistance with financial literacy for their clients. Not everyone has a background in finance, and an experienced wealth manager can be an invaluable resource when dealing with any number of financial hurdles.

How Do Wealth Managers Get Paid?

Not all wealth management contracts are the same—some managers work on commission, others charge a percentage of the assets they manage as their fee, and others receive hourly or one-time fees for their work. When dealing with a larger wealth management firm, individual managers may receive a salary while the firm collects one or both of these types of fees.

How Do You Know if Wealth Management Services are Right For You?

Generally speaking, wealth management services are most useful to high-net-worth individuals with complex financial situations.

This could include business owners with complicated tax structures, individuals who have received sizeable but complex inheritances, those facing retirement planning decisions or any number of other financial arrangements requiring specialized assistance.

In many cases, the cost of a wealth manager is dictated by their experience with less-common financial proceedings that only impact individuals with substantial assets. The estate tax, for instance, only applies to inheritances in excess of $14 million, but an individual with assets of that size must be able to understand and fulfill their tax obligations for that money. That’s where a wealth manager comes in.

How Much Money Do You Need for Wealth Management?

There is no cut-and-dry answer to how much money you must have before a wealth manager is needed, but generally speaking, these services are used by people with over $1 million in liquid assets or investments.

Certain wealth management firms even have a minimum investment threshold, usually somewhere between $2 million and $5 million.

How to Find a Wealth Manager

Finding a wealth manager doesn’t have to be difficult. Depending on your situation, you may have certain circumstances that present unique challenges necessitating a wealth manager’s services. When searching for a manager, be sure to talk with individuals or firms with experience in similar financial situations to yours.

You’ll also need to confirm that you have enough assets to invest in the firm you wish to work with. Certain firms will only take on clients with exceptionally high net worths in the millions of dollars.

Horizons Wealth Management offers services to individuals looking for support in their financial journey. Set up a call to discover if wealth management or one of their many services is right for you.

What to Look for in a Wealth Manager

The number one qualification in any sort of financial planning role is trustworthiness—be sure you feel comfortable working with anyone you plan to trust with your financial well-being, and don’t be afraid to shop around if the first manager you meet doesn’t feel like a good fit.

It’s important to vet a possible manager before diving in, and this includes asking about things like professional certifications and past success managing clients’ assets for them. You want to be sure your manager is aligned with your financial goals and has the necessary specializations to take on any unique situations you might find yourself facing based on the structure of your assets.

Bottom Line

Wealth management isn’t a necessary service for everyone, but individuals with high net worths must maintain good financial health. A wealth manager will have the experience and resources essential to make your money work for you while minimizing risks and avoiding potential pitfalls. When selecting a wealth manager, be sure to choose someone you can trust and who has the right specializations for your particular financial needs.

Wealth Management FAQs

What is wealth management in simple terms?

Wealth management is a service that combines the management of existing assets with short- and long-term financial planning to maximize returns on investments and minimize exposure to risks. It is typically only necessary for individuals possessing liquid assets in excess of a million dollars.

What is considered high net worth?

An individual with between $1 million and $5 million in liquid assets is generally considered to be “high net worth.” Individuals with between $5 million and $30 million are described as “very high net worth,” and individuals possessing more than $30 million in liquid assets are considered “ultra high net worth.”

Are there other services that may benefit me if I don’t have enough money for a wealth manager?

Wealth management isn’t for everyone, but that doesn’t mean individuals with fewer liquid assets shouldn’t enlist the help of a qualified financial adviser. 

What are the disadvantages of wealth management?

While there can be some potholes to avoid when seeking your perfect wealth manager, generally speaking, these services are entirely beneficial to individuals who find the right manager for their needs. 

Because some financial matters relating to high-net-worth people are complicated and do not come up often, you can miss out on some big opportunities if you don’t employ someone with the right specializations and experience.

There are also no certainties when dealing with financial matters—using a good wealth manager can help you navigate difficult situations. Still, sometimes the market is unpredictable, and a manager’s job becomes more about damage control than growing your assets. With the wrong manager, this sort of situation can be damaging to an investor and their portfolio.

/by
50th birthday
, ,

How to Build Wealth in Your 50’s

Key Takeaways

  • Focus on eliminating high-interest debt to free up resources for savings and investments, setting a solid foundation for retirement.
  • Trim excess expenses to increase funds available for investing in your retirement fund, laying the groundwork for financial security.
  • Maximize “catch-up” contributions to tax-advantaged accounts, enhancing your nest egg with the help of professional financial advice.

Navigating your 50s can be a critical period for financial planning, standing at the crossroads between active employment and impending retirement. This decade is an opportune time to assess, adjust, and accelerate wealth-building strategies to ensure a secure and comfortable future. In this guide, we will explore essential tactics for enhancing financial health in your 50s—from maximizing retirement savings with strategic contributions to diversifying income streams beyond traditional means.

Reduce Debt

In your 50s, paying down debt is crucial for building wealth and securing a financially stable future. This period marks a strategic shift from accumulating to eliminating debts, recognizing that each dollar paid off not only increases net worth but also frees up more resources for investments and savings. Reducing debt not only bolsters financial health but also alleviates the stress tied to high liabilities, paving the way for a smoother transition into retirement.

A strategic approach to managing debt starts by targeting high-interest obligations first—such as credit card balances or personal loans—which can lead to substantial interest savings over time. Additionally, consolidating debts into a lower-interest option can simplify repayment and help reduce overall costs more effectively.

A targeted debt strategy focuses on eliminating high-interest debts first—like credit cards and personal loans—to minimize long-term interest payments. Consolidating multiple debts into a lower-interest loan can also simplify your finances and lower your overall repayment burden.

Expenses Review

At this stage, fine-tuning your budget becomes crucial, as identifying and trimming unnecessary spending can free up significant funds for saving and investing. It’s time to critically evaluate your lifestyle habits—consider downsizing services you no longer need, shopping smarter by seeking discounts, or even switching to more cost-effective brands or providers.

Embracing frugality isn’t about sacrificing joy but rather choosing financial health over temporary pleasures. Many people use budgeting tools to gain insight into monthly expenditures, making it easier to spot areas ripe for reduction. For example, consolidating trips to save on gas, opting for home-cooked meals over eating out frequently, and canceling underused memberships can all contribute toward enhancing your financial situation. Investing the money saved from these strategies not only bolsters your retirement fund but also brings you closer to achieving lasting financial security. In essence, conscientious spending in your 50s lays down a solid foundation for wealth that supports both current needs and future aspirations.

Maximize Retirement Contributions

Maximizing retirement contributions in your 50s is crucial for building wealth as you edge closer to retirement. As you get closer to retirement, you enter into a period that allows for “catch-up” contributions in tax-advantaged accounts, offering a chance to increase your savings and benefit from compounding interest significantly. By prioritizing these additional deposits, you can enhance the growth of your retirement fund substantially.

Adjusting your budget to boost these contributions is essential. Whether it’s through an employer-sponsored 401(k) or an individual IRA, increasing your savings now can make a profound difference in the size of your nest egg. Consulting with a financial advisor could also optimize this strategy, ensuring that you’re making the most out of every opportunity to secure a financially comfortable future.

Carefully Manage Risk

Managing risk becomes increasingly important as you navigate through your 50s. This phase requires a strategic reassessment of your investment portfolio to ensure it aligns with your current risk tolerance and retirement goals. As retirement nears, the focus should shift toward preserving capital while still achieving reasonable growth. Diversifying investments across different asset classes—such as stocks, bonds, real estate, and possibly precious metals—can mitigate risk and reduce volatility in your portfolio.

In addition to diversification, consider adjusting the allocation of assets in your investment mix. While equities offer higher growth potential over time, they come with increased volatility. Gradually increasing the proportion of fixed-income securities can provide more stability as you approach retirement age. Regularly reviewing and rebalancing your portfolio ensures that it remains consistent with your evolving risk appetite and financial objectives, which is a critical step toward safeguarding wealth during this pivotal decade.

Establish a Retirement Plan

Creating a comprehensive retirement plan in your 50s is an essential step toward securing financial stability and building wealth as you approach the golden years. This process begins with a clear assessment of your current financial situation, including savings, investments, debts, and expected income streams in retirement. Understanding these elements allows you to set realistic goals for retirement living expenses based on your desired lifestyle. It’s also crucial at this stage to account for unforeseen costs such as healthcare, which can significantly impact spending needs.
To effectively make a retirement plan:

  • Evaluate Your Financial Status: Start by listing all sources of income (pensions, savings accounts, investment portfolios) and anticipated expenses.
  • Set Clear Retirement Goals: Define your retirement age and the lifestyle you wish to maintain—traveling, hobbies, and relocation plans should be considered here.
  • Calculate Expected Retirement Income Needs: Estimate how much money will be needed annually during retirement, considering inflation rates over time.
  • Develop A Savings Strategy: Determine how much must be saved from now until retirement to meet future income needs. This may involve maximizing contributions to tax-advantaged accounts like IRAs or 401(k)s.

A critical part of creating this plan involves regularly reviewing it—preferably annually—to adjust for any changes in personal circumstances or financial markets that could affect long-term objectives. Engaging with a professional financial advisor can provide valuable insights into complex areas such as tax planning and investment management tailored specifically towards achieving your individualized goals efficiently while navigating through the complexities of preparing for a comfortable retirement life.
Horizons Wealth Management can help you navigate your financial questions, no matter your age. Get in touch today to learn more about our wealth management, financial planning, retirement planning and managed portfolio services.

/by
Early Retirement
, ,

How to Retire Early

Retiring early is a dream shared by many but achieved by few. It’s not just about breaking free from the 9-to-5 grind but also about having the freedom to pursue your passions, travel, spend time with loved ones, or simply relax on a beach. Imagine doing all this while you’re still young and vibrant, without the burden of a paycheck-to-paycheck existence. While it may seem like a pipe dream, retiring early is a realistic goal for those who are willing to put in the effort and discipline required to make it a reality. With the right strategies, mindset, and planning, you can join the ranks of those who have successfully retired early and start living the life you’ve always wanted.

Key Takeaways

  • Retiring early requires a combination of strategic financial planning, disciplined saving, and smart investing to achieve financial independence and pursue your passions.
  • Key strategies for early retirement include taking advantage of workplace-sponsored retirement programs, paying off high-interest debt, investing early and often, using a Health Savings Account, and establishing multiple forms of income.
  • With the right guidance, such as from Horizons Wealth Management, you can create a personalized plan to reach your financial goals and achieve early retirement, allowing you to live the life you’ve always wanted.

What is Early Retirement?

Early retirement is a state of financial independence in which an individual stops working for a salary or wage before the traditional retirement age, which is typically around 65 years old. In this situation, one has sufficient wealth, income streams, and resources to support one’s living expenses without the need for a regular paycheck. Essentially, early retirement means having the financial freedom to pursue one’s passions and interests without worrying about a steady income.

Tips to Retire Early

By combining strategic financial planning, disciplined saving, and smart investing, you can set yourself on the path to retiring early and enjoying the freedom and flexibility that comes with it.

Take Advantage of Workplace-Sponsored Retirement Programs

Take advantage of workplace retirement savings accounts, such as 401(k), 403(b), or Thrift Savings Plan, which offer tax benefits and potential employer matching contributions to supercharge your savings. By contributing enough to maximize employer matching, you can earn free money that can significantly boost your retirement nest egg.

Don’t Withdraw from Retirement Accounts

Avoid the temptation to withdraw funds from your retirement accounts for non-essential expenses. This can lead to penalties, taxes, and a significant setback to your early retirement goals. Instead, treat your retirement accounts as sacred and let the power of compound interest work in your favor over time.

Pay Off Debt

Paying off high-interest debt, such as credit card balances, and avoiding new debt can free up a significant amount of money in your budget to invest in your retirement accounts, accelerating your progress toward financial independence. By eliminating debt and avoiding new debt, you can redirect your hard-earned money toward building a prosperous retirement future.

Invest Early and Often

Investing early and often can help your money grow exponentially over time, thanks to the power of compound interest, and can significantly boost your chances of achieving early retirement. By starting to invest as soon as possible and consistently adding to your investments, you can take advantage of the market’s potential for long-term growth and build a sizable nest egg.

Use an HSA

Utilizing a Health Savings Account (HSA) can be a valuable strategy for early retirees. It allows you to set aside pre-tax dollars for medical expenses, reducing your taxable income and lowering your tax liability. Additionally, HSA funds can be invested and grown over time, providing a source of tax-free money for healthcare expenses in retirement.

Establish Multiple Forms of Income

Creating multiple streams of income can provide a safety net and help you achieve early retirement by reducing your reliance on a single income source. Consider creating multiple income streams, such as:

  • Dividend-paying stocks or index funds
  • Real estate investments, including rental properties or real estate investment trusts (REITs)
  • Online businesses or side hustles, such as blogging, coaching, or freelancing
  • A small business or entrepreneurial venture

Bottom Line

Achieving early retirement requires a combination of strategic financial planning, disciplined saving, and smart investing. By following these principles, you can break free from work life and pursue your passions, travel, and spend time with loved ones. With the right guidance, you can create a prosperous retirement future and live the life you’ve always wanted. Horizons Wealth Management can help you develop a personalized plan to reach your retirement financial goals and achieve early retirement.

/by
, , ,

These surprising spending truths could upend your retirement

When do retirees typically spend the most money (and what are they spending it on)?

How much you spend will have a big impact on how well you live in retirement, according to new research from J.P. Morgan.

Learn more here.

/by
, ,

Social Security’s Full Retirement Age Will Rise in 2018

The arrival of 2018 will bring with it several changes on the Social Security front.

This slow increase in the full retirement age presents a challenge now that Americans are living longer and saving less.  If Social Security is important in your life — or the life of someone you love — you should know about some key changes that will be made to the program coming in 2018.  Click below to learn more.

Source: http://clark.com/personal-finance-credit/social-security-full-retirement-age-rising-to-67

/by
, , ,

4 Post-Work Life Tips

How to have a long and healthy retirement:

It’s a time when we’re supposed to find happiness, but post-work life is often associated with severe health problems. Below are some tips to help you live long and prosper.

Source: https://www.theguardian.com/lifeandstyle/2017/may/15/how-to-have-long-and-healthy-retirement

/by
,

Test Your Retirement IQ

What’s the biggest threat to a comfortable retirement? Ignorance. The decisions you make leading up to retirement, including how much to save, how to allocate your investments, when to take Social Security and how to anticipate your retirement expenses can make a big difference in your old age.

And the decisions don’t stop on day one of your post-career life. Once you’re in retirement, you’ll need smart strategies for taking withdrawals and investing your resources so they last as long as you do.

So how well-versed are you on this critical subject of RETIREMENT?   Take this quiz to find out.

/by
, , , , , ,

How Much Money You Need To Save Each Day To Become A Millionaire By Age 65

Becoming rich is nothing more than a matter of committing and sticking to a systematic savings and investment plan.

If you want to get rich, start investing- and start as early as you possibly can.

To illustrate the simplicity of building wealth over time, Bach created a chart detailing how much money you need to set aside each day, month, or year in order to have $1 million saved by the time you’re 65.

Next time you consider running to Starbucks for a $4 latte, think about this chart and consider redirecting that coffee cash to your savings.  Check it out here.

/by
, , ,

When Will I Be Retirement Ready?

How do we know when we have enough for retirement?  Given it’s National Save for Retirement Week, there’s no better time than now to take the mystery out of saving for retirement.  The objective is that when you arrive at the golden years and find that they are truly golden-  It’s called FINANCIAL FREEDOM.   And it’s easier to get there with a little planning-  even in your 20s- Because it’s closer than you think!

 

Click the here to learn when you will be “Retirement Ready.”

/by
, , , ,

If You Want to Retire in 10 Years, Do These 5 Things Now

The actions you take in the final decade before you quit working are crucial to getting the next phase off to a smooth start.

We provide retirement planning counsel to many clients. Considering retirement is exciting, but it can also cause anxiety and fear. That’s why we encourage our clients to begin planning for retirement with a comprehensive financial plan.  Seeing your personalized financial plan takes away much of the anxiety before your retirement date arrives.

Money Magazine offers this advice if you plan to retire in the next 10 years:

Click Here.

/by