Manage the Risk

Manage the Risk

Here is a hypothetical story of a stock owned by a successful business man, a seasoned investor. We will call him Paul. This was a stock with opportunity for growth- the boys on Wall Street loved it and it had been on a "tear," showing no sign of stopping. Paul excitedly buys a large portion in his portfolio expecting the stock to continue its trajectory "to the moon." All goes as planned; he is up 15% in a few weeks... Then it happens. The unthinkable- his stock goes down and down and down again. The once "sure" stock selection is now down 40%. Not so exciting now.... What if Paul said "ok no problem, I only need it to go up 40% to break-even!"

Do you believe him?

Well if you do- that is okay, many people do at first glance.  Here is the reality: Gaining 40% won't get him back to even....  The gain needed is +66.67% (FYI- if the loss is 50%, you need +100%)!  This is the power of percentages.  We have all been there at one time in our lives. This story exposes the necessity to manage risk.

Anyone Can Pick Investments, Few Can Manage Investments

The professional planning around investments requires considering the big picture: your goals, time horizon, true diversification, estate plans, taxes, the current economic outlook and most importantly the real acceptable risk to you.   Many people acknowledge risk, "sure it can go down"... however most never accept risk, "I can afford to lose $xxx."  Risk is real.  It is necessary.  And risk is okay, when the framework of investment management focuses on it.

Benjamin Graham, considered the father of value investing wrote,

"The essence of investment management is the management of risks, not the management of returns."  

• Use the big picture- your financial plan to select and manage your holdings Don't commit a large percentage to a single investment holding, diversify Use stop losses (an order to sell at a certain price that helps manage a holding in the case of a price decline) Don't marry yourself to an idea or stock

In the current market environment with the Indexes hitting all-time highs, now is the time to know what risk is acceptable to you and preserve accordingly.  We've seen great growth the last several years, but you need to manage the risk in your portfolio.  Yes, the market may continue to grind higher but what if it doesn't?  Is your true acceptable risk alright with you?  Make sure your primary goals are achieved.  Is your goal capital preservation, income generation, or long term growth for retirement? Seek professional and appropriate advice to have your portfolio evaluated and find your acceptable risk....  You can often hear me say, "If you appropriately manage the risks the returns will take care of themselves."

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Luke Fields and not necessarily those of RJFS or Raymond James. Past performance may not be indicative of future results. The example provided is intended to be a hypothetical illustration only, and does not represent any investor account or experience. Individual results may vary; Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification. You should discuss any tax or legal matters with the appropriate professional.

About Stewardship Cents 

Stewardship Cents exists to Educate, Entertain and Enhance the financial wisdom of all who read it.  Everyone needs to be wise with what has been entrusted to them and common sense can help us be good stewards of all that we have.  Stewardship is a belief of responsible overseeing and protecting of important resources.

Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981.  A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a CERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses.  He resides in Columbus, OH with his high school sweetheart, Beth and their three children.  Luke is an active member of his church, serving in leadership and finances.

  Follow additional insights and connect on LinkedIn, Facebook, his blog or Twitter.  You can always reach him with comments or questions at: luke.fields@raymondjames.com.

Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC

Do you know what Bonds you own?

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Don't be like Groucho.

There is a story of the famous comedian Groucho Marx, who while touring the New York Stock Exchange had a floor trader yell out at him, "Hey Groucho, where do you invest your money?" The leader of the Marx brother replied, "I keep my money in Treasury bonds." "They don't make you much money," a trader shouted back. "They do," Groucho said smugly, "if you have enough of them...."

Not All Bonds are Created Equal.

Historically, US Treasuries have provided what some consider "guaranteed" fixed coupon of interest and are called by many as "risk-free assets."  However, the associated risks must be evaluated as our world and economic environments change.  Often investors fail to decipher the numerous categories of bonds; NOT ALL BONDS ARE CREATED EQUAL.  Literally, there are dozens of categories- US Corporate, Tax Free Municipals, US Gov't (notes, bills, bonds), International, Emerging market bonds to name a few; each with different interest rate, credit, currency and liquidity risks.

What is Interest rate risk?  Think of bonds like a seesaw.  When interest rates go up, the price of bonds typically go down.  And vice-versea.  If you are forced to sell your bond before its maturity or you purchased at a premium (an amount higher than its issue price) you will receive less principal than you originally invested. What is Credit rate risk?  It is the risk that the issuer of the bond will go belly up.  The financial health of the issuer is critical.

Do you know what risk your bonds carry?

One of the first rules of investing is to know what you own.  Bonds (fixed income) play an important role in a well-diversified portfolio alongside stocks, alternatives, and cash alternatives.  Fixed income allocations typically help provide stability to a portfolio (as they are historically less volatile) and regular income.  We've enjoyed a 30 year interest rate "tail wind" as US Treasury rates have declined from their 1980s high of 15.32%.  This provided between 1980 and 2011 an average annual return of 8.68%*, which is similar to historical equity returns with a risk profile lower than equities during the same time period.  I do believe the US Government will continue to pay bondholders interest on their obligations; however the interest rate risk associated with certain bonds, namely long-dated Treasuries, is real. As rates increase over the next few years (no one knows when, how much or how quickly- the Federal Reserve has their work cut out for them), the pricing impact could be substantial to certain bond investors.  This is particularly concerning for the more conservative and/or older investor nearing or in retirement, who believes they are in "safe" bonds.  While timely payment of principal and interest payments on US government bonds and Treasury bills is guaranteed, the principal value can fluctuate with market conditions and investors could incur a loss of principal is sold prior to maturity.

On a daily basis I review portfolios of clients and prospective clients that are seeking answers to help them understand the true risk of their bonds.  Remember, your investment goals should dictate your investments and in this case the type of bonds you should utilize.  Maintaining consistent income, stable value and beating projected inflation rates should be areas of focus for your bond allocation.

Don't be like Groucho, get your bonds analyzed by a qualified financial advisor.

Click here if you would like to read more about bonds.

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Luke Fields and not necessarily those of RJFS or Raymond James. Investments mentioned may not be suitable for all investors. Past performance may not be indicative of future results. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. U.S. government bond and Treasury bills are guaranteed by the U.S. government and if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government.

*1980-2011 Barclays Aggregate bond index, formerly known as Lehman Brothers Agg bond index prior to 2008.

About Stewardship Cents Stewardship Cents exists to Educate, Entertain and Enhance the financial wisdom of all who read it.  Everyone needs to be wise with what has been entrusted to them and common sense can help us be good stewards of all that we have.  Stewardship is a belief of responsible overseeing and protecting of important resources.      Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981.  A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a CERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses.  He resides in Columbus, OH with his high school sweetheart, Beth and their three children.  Luke is an active member of his church, serving in leadership and finances.    Follow additional insights and connect on LinkedIn, Facebook, his blog or Twitter. You can always reach him with comments or questions at: luke.fields@raymondjames.com. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC

A Man's Lawn... Should you Refinance?

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A Man's Lawn

When my wife and I were first married, with no kids and plenty of time, I was very meticulous about the care of my lawn.  If you were to ask her, she would describe me as "anal."  As many of you know, over time having kids along with numerous commitments and a growing business has a way of changing things.  My meticulous ground keeping has now become simply a desire to grow grass. As spring emerges it makes me think of many home related activities beyond my ideal beautiful lawn.  The aesthetics of your home is important but the financial health of your home is critical.  Far too many people who call themselves "advisors" fail to address one of their clients' largest assets and contributor of net worth, their home.  Those of you who work with me know that from our planning reviews it is important to be a good steward of your home financially, which means reviewing your loan.  So to provide extended advice as a service to you, I've asked a good friend of mine Bob McKearin, to share his thoughts as a mortgage specialist.

Let me know if you have any questions and feel free to reach out to Bob.

When is it the right time to refinance?

First, I want to reiterate the comments made by a Chief Economist at one of the major lending institutions in the country.  He says, "People who can benefit from refinancing are literally crazy if they don't take advantage of it now.  The risks-rewards are so tilted toward action that it makes no sense to sit on the sidelines."

It is important to realize mortgage interest rates truly are at historic lows!  Most homeowners in the country have never experienced mortgage rates at these levels.

So, is it a good time for you? Is it time to "GET OFF THE FENCE"?

When refinancing a mortgage there is more to the decision than just lowering the rate or obtaining a lower payment.  Borrowers need to know WHY they want to refinance.

What is the objective?

• Lower the monthly payment
• Reduce total interest costs over the life of the loan
• Consolidate higher interest debt into a lower interest mortgage
• Cash-out equity to access funds for other needs
• Reduce the current term of your mortgage

The list can go on and on.  The point is to know what your objective is so the loan can be structured properly.  Consulting with your Financial Advisor will help determine the course of action to take.  This will help you receive maximum benefit.

Now that you know what your objective is, it is time to get prepared.

It is no secret lenders have tightened credit standards since the real estate crash.  The purpose for tighter standards is to reduce defaults and loan buybacks.  Accomplishing these objectives benefit us all. Suggestion...don't go into the approval process with a mind set of "doing battle" with your chosen lender.  Many borrowers try to tell the lender what they need to complete their job.  It doesn't work that way.  The lender holds the purse strings and tells the borrower what they need.  Save yourself a lot of headaches and provide the documentation requested, sometimes you may have to provide it a second time.  Do as requested and it will make your life a lot easier.  You will reach your goal to save money much sooner.

Since we are a month away from April 15^th when taxes are due, it is a very good time to look into refinancing your mortgage.  You are already organizing your financial records so you just need to make copies to provide your lender.  The initial documents required when applying for a mortgage are:

• Copies of last 30 days of paystubs
• Copies of last 2yrs of W2's
• Copies of last 2yrs Federal Tax returns including all addendums
• Copies of last 60 days of bank statements (checking & savings)
• Copies of last 2 asset statements (401K, IRA's, brokerage accounts)

(Depending on a borrower's specific situation additional documentation may be required)

Choosing a lender / loan originator...

When choosing a lender it is important to select a lender with a very strong reputation.  There are all sorts to choose from: large, small, internet, banks, brokers, etc. but their reputation is a key element. Check the Chamber of Commerce or Better Business Bureau. There is a lot more to consider than just a low rate.

When it comes to a loan originator, select someone who is a specialist in all aspects of loan origination. It is important to select someone who listens to you outline your objectives and then can lead you through the process. Most people rely on recommendations from friends and family because they will learn how reliable and trustworthy their loan originator was.

The goal of a highly professional loan originator is to provide top quality service to their client which will result in multiple referrals from that same client. They want to build relationships with their clients that will stand the test of time. To accomplish this they need to earn their client's trust.

According to economic experts, rates are at historic 69 year lows. Don't sit on the sidelines and miss the opportunity. There are a host of programs to address the needs of many homeowners. The time to obtain a mortgage evaluation is NOW!

Bob McKearin | Branch Manager - Mortgage Specialist Equity Resources, Inc. 7251 Sawmill Rd. | Dublin, OH 43016 | Phone 614-832-1967 | Fax 614-467-3924 Email rmckearin@callequity.net, NMLS #382060. OH MB800302. LO.038669.

The opinions and services of Bob McKearin and Equity Resources are independent of Raymond James.

About Stewardship Cents    Stewardship Cents exists to Educate, Entertain and Enhance the financial wisdom of all who read it.  Everyone needs to be wise with what has been entrusted to them and common sense can help us be good stewards of all that we have.  Stewardship is a belief of responsible overseeing and protecting of important resources. Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981.  A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a CERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life,     Health and Variable Annuity Insurance licenses.  He resides in Columbus, OH with his high school sweetheart, Beth and their three children.  Luke is an active member of his church, serving in leadership and finances. Follow additional insights and connect on LinkedIn, Facebook, his blog or Twitter. You can always reach him with comments or questions at: luke.fields@raymondjames.com. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC

Don't Fall In Love...

Don't Fall in Love... My wife and I have three little ones who often make exaggerated claims of how much "I love ice cream," "I love Teenage Mutant Ninja Turtles," "I love that song"... and on the list goes. As adults we also can pledge our love to many things we experience and aspire to. However, there are only a few things in life we should truly, deeply     love. I believe we all agree our spouse, kids and family belong here. When my wife recently asked my 4 year old son what his favorite Christmas gift was, his reply was impressive... "the love my mommy gives me." WOW-- you should have seen my wife light up with pure joy. As I laughed in disbelief, I bent over to him and said that is sweet... but you really should have saved that one for when you are in big trouble. He just smirked. Over the past few months I have shared some of the basics of  financial planning; budgeting, emergency funds, life insurance, and getting organized (if you have missed them go to my blog HERE). I want to focus this discussion on the "wheel-house" of everyone's financial plan- your investments. Let me explain. Don't fall in love...with your investments. Investments are the vehicle or the "means to an end" to help accomplish your financial goals. Your goals should drive your investments, don't allow your investments to drive your goals. I often hear people share their "love" of a particular investment or display common concerning behaviors we all can struggle with in terms of our money. For most people, one of the strongest emotional responses in life involves  money. Let me share some common scenarios as a professional I observe, using the world of "behavioral finance." The most common behavior is "Overconfidence." This is a common problem that is difficult for an individual to realize in themselves, as they believe they are better than average or most people in investing- although others usually see this overestimation. Overconfidence most often leads to frequent portfolio changes and increasing risk taking while at the same time underestimating the risks associated...this ends up being costly. Infatuation of an investment or the fixation of perfectly timing markets repeatedly is an "Allure" -see below.          Source Morningstar Advisor, Feb 2013     *See footnotes. Another common behavior is "Herding."  We are social animals and like to roam in packs, following the consensus view. Watch out! The problem is how often when everyone seems to say something is going to happen, it seldom does. For example, in 1999 you may have heard "Tech stocks would never stop climbing" or in 2006 many said "housing prices would continue to go higher," right...?  Or how about you are at a gathering and someone shares how they have the investment that will change your life, it's the "hot-stock-tip." Investment success stories and tips are usually very misleading. Be careful what bandwagon of social influence you jump on.          "Risk Aversion/Loss Aversion" has become extremely typical since "the great recession of 2008."  Everyone felt that pain and some unfortunately still are. Aversion refers to the tendency for people to strongly prefer avoiding losses over earning gains. Studies have shown repeatedly that people find losses twice to two-and-a-half times as painful as gains are pleasurable. Emotional pain associated with a loss can paralyze investors to hold on to loser investments without solid fundamentals to do so (irrational "love" at times), not invest appropriately and often sadly avoid investing all together. There are many more behavior finance symptoms we could discuss but here is the message. Don't fall in love with your investments, thus letting your emotions get in the way of your financial plan. One of the greatest pleasures of my passion as an advisor is encouraging my clients to dream big, identify goals and then develop a     plan to help achieve them. Your carefully selected, planned and refined financial goals are what are important. I have heard it said, "good investing should be about as exciting as watching the grass grow." Here are three reasons why most people shouldn't manage their own money- the risks are too high: Emotional attachment. As I shared prior, it is near impossible to detach the emotion of your hard-earned money from wise investment decisions. Heck, I'm an expert on this and I still sometimes seek good counsel for my investments. Don't love your investments. Time. Investing with the wall street gang is not a part time hobby. Our world is increasingly inter-related in terms of macroeconomics,politics, global issues, etc. I also believe we are ever more "niche focused" in our expertise's. Your time is almost always best spent in terms of profitability and efficiency doing what you do best, your niche skill set. Enjoyment. In order to do anything well you have to like what you are doing (preferably passionate about it) and desire to do it. I have found few people who really enjoy handling their investments by themselves. Over     time I educate and help clients become more comfortable; but the reality is most will never name at top of their list of fun activities-- the desire to research and reallocate their investments. Seek out a trustworthy, qualified and board certified investment professional to assist you. Most of us would     never dream of repairing major engine work on our car or performing eye surgery ourselves right? Why then would you risk your kid's college, ability to retire and overall financial future? The best financial strategies are collaborative, interactive planning with someone you trust. Let me know if I can be of assistance to your family. Luke Fields, CFP® The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Theinformation has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Luke Fields and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Past performance may not be indicative of future results. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. *Exhibit 1 This is a hypothetical illustration and is not intended to reflect the actual  performance of any particular security. Future performance cannot be guaranteed and investment yields will fluctuate with market conditions. Indexes used: Stocks- The S&P 500 is an unmanaged index of 500 widely held stocks that's generally considered representative of the U.S. stock market. Bonds- U.S. Government Bonds and Treasury Bills are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. 60/40 Portfolio- Mix of S&P 500 and U.S Government Bonds and Treasury Bills.

About Stewardship Cents Stewardship Cents exists to Educate, Entertain and Enhance the financial wisdom of all who read it. Everyone needs to be wise with what has been entrusted to them and common sense can help us be good stewards of all that we have. Stewardship is a belief of responsible overseeing and protecting of important resources.  Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981.  A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a CERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses. He resides in Columbus, OH with his high school sweetheart, Beth and their three children.  Luke is an active member of his church, serving in leadership and finances. Follow additionalinsights and connect on LinkedIn, Facebook, his blog  or Twitter. You can always reach him with comments or questions at: luke.fields@raymondjames.com. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC

Take Control, A Resolution You Can't Afford to Ignore

A Resolution You Can't Afford to Ignore

Happy New Year! Turning the calendar to January is a good thing. For some of us it is a fresh start; forgetting what was the year before. For others it is an exciting time of year, full of hope and opportunity for the year ahead. Most of us at one time have made New Year's Resolutions. Each January 1st about 100 million Americans vow a new start regarding something in their life. The usual suspects top the list each year; lose weight, quit smoking, save money, and spend more time with family. Unfortunately, 4 out of 5... 80% of resolutions are ditched and usually done so within the first few weeks.

You Must Do This...

I specifically waited until later in the month to send out this plea for you to consider. I figure that many have already abandoned their resolutions and it was a great time to challenge you with the real one. The one you can't afford to not do. It is a good resolution at any time of the year, one that will bless you, your family and likely your grandkids for future years to come.

TAKE CONTROL OF YOUR FINANCES.

Take control of your past, present and future finances. This is the year. You can't wait until next year, or "when I get that raise," "once the kids are..." or "when we payoff that debt." No one will do it for you. It takes effort, commitment and a plan. But I promise you; taking control of your finances will be one of the best things you ever did.

A Resolution you can't afford to ignore-

Take Control of Your Finances.

Get Organized

Create a master list of all of your investments, bank statements, insurance policies, loans, names of key professionals in your life, etc. Have a binder to collect the paperwork as it rolls in. Make sure it is kept in a safe, fireproof place (you will also want to consider a protected electronic copy). Communicate to your children and/or executor of your estate where it is kept.

Establish an Emergency Fund

This is a necessary foundation of your plan. You need to have 3 to 6 months of living expenses available in case you should need it. Click here to read about Emergency funds

Live Below Your Means

Forget the "Joneses" down the street. Comparisons with others are not helpful and usually not accurate. Many affluent-appearing lifestyles are riddled with debt. Create and track a budget. This will give you the "guardrails" to confidently know what you can afford and reveal to you the opportunities you can consider. Click here to read about a Budget

Set Goals

Once you are organized, have money set aside for a rainy day and are using a budget you can set appropriate and measurable goals. You can now identify them and track your progress. Focus on why they are important versus the how- personalizing them will increase your motivation. Talk with your spouse. Communication is so vital and agreement on common goals is essential to accomplish what is important to you both.

Reduce and Eliminate Debt

This is especially true of high-interest debt, which typically is credit cards. Carry $0 balance on cards and pay with cash when possible. This will help your credit score and your overall savings to debt ratio. Don't tempt yourself with email or twitter sales alerts from your favorite retailers- unsubscribe from them.

  "Leverage gives the illusion of wealth. Saving is wealth."

-Richard Bernstein

Protect your Privacy

Regularly review your credit report and monthly your credit card statements for identity theft. Change your passwords often and don't make them easy-to-guess. Be watchful for "phishing" schemes to get you to provide your personal (especially your social security number, account numbers, etc) information via online, email or over the phone. If in doubt, you should contact through known phone numbers to verify the request.

Review your Insurance

An annual checkup for proper coverage is wise to protect your assets and family if something should happen. Do you own a business or have a family? An umbrella policy is a good consideration to add extra protection along with your home and auto insurance. Unfortunately, most people are under-insured. Click here to read more about the necessity of life insurance

Create an Estate Plan

At the minimum, you need to have a will. This will avoid your assets going through court probate and also make assets available immediately to your beneficiaries. Especially, a will is a necessity if you have children, so you can appoint the desired guardian.

Get Savvy, Educate Yourself

No one will take control of your money better than you. The world of finances can be intimidating and you may not ever be an expert but with some reading and basic education you can have the knowledge you need to make empowered decisions. Read, ask and then talk to a true highly educated professional.

Enjoy Life

Even though you may agree on the importance of taking control of your finances, I realize the process will not likely top your 100 favorite things to do. But trust me, it is worth it! It will provide you with knowledge which leads to confidence, less worry and the ability to make sound educated choices. All that we have is given to us to be stewards over. It is all resources, yes to manage and save, but also to enjoy. Once you get these items inline and are on the right track- reward yourself. Go out to dinner to celebrate your keeping this resolution, take that trip you have been planning towards or whatever you find fun! (But only as long as you can afford... of course I would remind you)

Give Generously

This may sound against the save and keep track of you finance strategy. It is shown however that you will have better health and discipline in your budget and savings if you seek to be generous with your money, time and talents. Give to your church or favorite charity, donate your time and use your skills to help others. This helps us all have a good perspective of life.

Talk to a Professional

I am currently accepting new clients, so as you have questions and need further assistance, I would be glad to casually discuss how my firm and I can assist you and your family.

I wish you and yours the absolute best and a blessed 2013!

To Your Financial Freedom,

Luke Fields, CFP®

Any information is not complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Luke Fields and not necessarily those of RJFS or Raymond James.

About Stewardship Cents Stewardship Cents exists to Educate, Entertain and Enhance the financial wisdom of all who read it.  Everyone needs to be wise with what has been entrusted to them and common sense can help us be good stewards of all that we have.  Stewardship is a belief of responsible overseeing and protecting of important resources. Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981.  A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a CERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses.  He resides in Columbus, OH with his high school sweetheart, Beth and their three children.  Luke is an active member of his church, serving in leadership and finances. Follow additional insights and connect on LinkedIn, Facebook, his blog or Twitter. You can always reach him with comments or questions at: luke.fields@raymondjames.com. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC

Why you Need an Emergency Fund... November 2012 Stewardship Cents

Click here to subscribe to Stewardship Cents Newsletter Thanksgiving Reflections Thanksgiving and traditions go hand in hand.  A large meal, football and times of reflection are the most common.  And then there are the traditions we have long endured, like my father's annual reading at the dinner table.  A folded article or newspaper clipping always finds its way out of his shirt pocket with an eager audience awaiting...(just a little sarcasm). Years ago Readers Digest dominated this annual reading but now it comes from a variety of sources, thanks to the Internet and forwarded emails.  We have covered most all Thanksgiving topics including pumpkin types, why Ohio's corn is special, of course the pilgrims and a few variations on the English-speaking Indian Squanto.  Whatever the story, it always directs our discussion to the real reason for our family tradition, which ends with each family member and guest having a chance to reflect and share what they are truly thankful for. I hope your Thanksgiving was a time of reflection of the year gone by, shared with family, football, and stuffing ourselves with more than we should attempt.  The traditions we share, whether by our choice or required by the family create memories we will cherish forever. The financial planning tie-in... a good tradition We have talked in recent newsletters about budgeting and life insurance.  Another critical principal of planning is to have an Emergency fund.  Some call this a rainy day fund, slush fund or just savings.  It's a good tradition to make sure you have resources set aside. "It is wise and good stewardship to save today for what you might need tomorrow or later down the road." The pilgrims learned this principle very quickly and that fellow Squanto I mentioned earlier, helped them prepare and learn how to survive in lean times. Bankrate.com recently reported that 28% of Americans have no emergency savings and among those that do have money set aside, 50% had less than 3 months of expenses. So what are the "emergencies" I am talking about?  They range from job loss, an extended period of lower or no income for a small-business owner or commission sales person, illness, natural disasters, and even smaller, yet important issues to resolve such as car repairs or a broken washer. How Much do you Need? 6 months is the minimum amount you need.  Now realize that this is not half (6 months) of your full annual salary.  It is calculated on your living expenses- necessities such as housing, utilities, basic bills and basic food.  In a tight money time, you will not be eating out or shopping.  If you have lost your job, you won't be paying income taxes or making a 401k contribution.  6 months is even more necessary if your family is dependent on only one income. Where do you keep it? Your emergency fund should be someplace easy to access and liquid.  Banks are safe, but are not helpful with their 0.1% savings rates; good luck beating inflation.  A CD is not generally recommended for this type of money because it is not liquid and you will pay a fee if you need it prior to maturity. A strategy I use with many of my clients is to have them keep at their bank what is comfortable for their cash flow and to be able to easily pay their monthly bills.  The remaining amount of their calculated emergency fund is then placed in a Joint investment account to be invested in lower risk but much better yielding rates than the bank can provide.  A portion is kept in cash, majority in short term bonds, some in moderate term bonds and then, in some cases, when the 6 month need is fully met we may invest in dividend stocks.  This approach creates buckets of risk ranging from cash to stocks. "The haves and the have-nots can often be traced back to the did and the did-nots."                                      -D.O. Flynn How do you start? Today is the day. A detailed budget will uncover waste and opportunities to put towards your emergency fund. Start a direct deposit from each paycheck. Earmark a portion of each bonus or larger check you may receive. Here is a calculator to help you know what to shoot for: Click here To your financial freedom, Luke Fields, CFP® Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members. High-yield (below investment grade) bonds are not suitable for all investors. When appropriate, these bonds should only comprise a modest portion of your portfolio. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. Investing involves risk and you may lose your principal. Dividends are not guaranteed and must be authorized by the company's board of directors. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Keep in mind that there is no assurance that any strategy will ultimately be successful or profitable nor protect against a loss. Any opinions are those of Luke Fields and not necessarily those of RJFS or Raymond James. You should discuss any tax or legal matters with the appropriate professional. About Stewardship Cents Stewardship Cents exists to Educate, Entertain and Enhance the financial wisdom of all who read it. Everyone needs to be wise with what has been entrusted to them and common sense can help us be good stewards of all that we have. Stewardship is a belief of responsible overseeing and protecting of important resources. Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981. A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a CERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses. He resides in Columbus, OH with his high school sweetheart, Beth and their three children. Luke is an active member of his church, serving in leadership and finances. Follow additional insights and connect on LinkedIn, Facebook, his blog or Twitter. You can always reach him with comments or questions at: luke.fields@raymondjames.com. Securities offered through Raymond James Financial Services, Inc. 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Now This IS a Scary Story (Why you need insurance)

Now This IS a Scary Story By Stewardship Cents Newsletter, click here to subscribe.

First a funny story

Our family's favorite time of year is the fall, enjoying the crisp air, apple picking, kid's sporting events and the beautiful foliage.  We also like Halloween.  When else can you dress up completely ridiculous and not have to explain a thing?  I am always amazed how many neighbors you meet on trick or treat night.  I am a big kid at heart and enjoy a good scare.  For several years in a row I would scare my neighbor across the street with my Sasquatch mask.  One year was epic.  She had decided to stay inside her house because she learned from my prior 3 years' antics.  Her mistake was she decided to sit at her kitchen table with her back to their sliding glass door, unlocked.  With her husband's full permission, I quietly opened their door and perched my mask just over her left shoulder, waiting for her to turn her head just enough.... The scream was heard down the street even with doors closed!

Ok here is the real story

It's the scary story of an unprepared family, with a widow facing the recent death of a spouse, leaving a mortgage, debt and dependents to care for.  We are not guaranteed tomorrow.  Sickness or tragedy can sadly strike in the blink of an eye.  When a financial mess is left behind, the normal period of grief and stress from the passing of a loved one can be greatly compounded spanning a prolonged duration.

Life Insurance is a basic and essential principle of financial planning.

No one likes to discuss death, I get that.  However, it's important to be prepared for the uncertain.  Maybe you say "I'm single and don't have any children, so I don't need life insurance."  Think again.  Just a small relatively inexpensive policy of $25,000 is a blessing to help your family with funeral expenses.  It is true that some people reach a point in their lives that insurance is too expensive given their age or a particular health related issue.  Others may have done a great job accumulating assets and living debt free that they then can self-insure through their savings.  Unfortunately, the truth is many people if they even have insurance, are severely underinsured.  Insurance can be affordable especially when you consider the risk for your spouse and kids of not having it.

Insurance can provide an income stream for your spouse, money to pay off the mortgage/other debts, funding for your children's college education and even a financial legacy to pass on.

What to look for...

Buy Term. Typically (except for unique situations), term life insurance could be your best option.  It provides the most coverage at affordable level premiums and it can be re-shopped at any time for better rates.  Term also helps free up cash you could have spent elsewhere, such as investing.

Choose the proper coverage.  The proper amount of coverage on you and your spouse's life should be calculated based on your needs not simply a multiple of your current salary or on an employer's group plan.  It is flexible, but has to be selected appropriately.

Choose the right provider.  Life Insurance is offered everywhere from automobile clubs to alumni associations.  However, choose a qualified professional who will consider your unique situation and full financial goals.

Keep your coverage updated.  With new babies, a new mortgage, job change or retirement insurance plans need to be revised.

For more informaton on choosing insurance click here

Any opinions are those of Luke A Fields, CFP® and not necessarily those of RJFS or Raymond James.

About Stewardship Cents Stewardship Cents exists to Educate, Entertain and Enhance the financial wisdom of all who read it.  Everyone needs to be wise with what has been entrusted to them and common sense can help us be good stewards of all that we have.  Stewardship is a belief of responsible overseeing and protecting of important resources. Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981.  A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a CERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses.  He resides in Columbus, OH with his high school sweetheart, Beth and their three children.  Luke is an active member of his church, serving in leadership and finances. Follow additional insights and connect on LinkedIn, Facebook, his blog or Twitter. You can always reach him with comments or questions at: luke.fields@raymondjames.com. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC

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I don't need a budget... Stewardship Cents Sept 2012

I don’t need a budget...

Stewardship Cents Newsletter    Sept 2012(click here to subscribe)

Whether you make $50,000 a year or $5 Million… you need a budget. When I ask the question “what is your annual income?” most people know exactly how much is coming in.  But the real question is “how much is going out?”  Now let’s be honest, most of us neglect the answer to this question.

“The amount of money you have has got nothing to do with what you earn.  People earning a million dollars a year can have no money and people earning $35,000 a year can be quite well off. It’s not what you earn, it’s what you spend.”  - Paul Clitheroe "A budget tells us what we can't afford, but it doesn't keep us from buying it."  - William Feather

Surprises and Opportunities

Often I hear startled comments after a budgets review such as, “I spend how much on coffee each year?!”  “We only save $______ each month?!”  “We pay how much interest?!”  And good surprises too, “Wow I thought we gave more away… lets increase our charitable giving.” “We really can afford to do ____.” For some people, maybe the $4.50 workday coffee is okay because you have chosen that you can afford it and you enjoy your daily cup of joe (for those of you wondering…5 days a week x $4.50 x 49 weeks is over $1,100 a year).  For others though, a revelation like this can change spending perspectives quickly.  Money is a resource to enjoy but you have to know where it is going.  The point is, as long as you stay in the “guardrails” that you set, you don’t have to worry and your stress levels drop.  You can have confidence because you are now in control of your cash flow and spending choices.  You can work towards reaching your goals, like reducing debt, paying cash for that next major purchase, setting money away for your kid’s college and most importantly saving for your retirement.

How to make a budget happen

The word budget often makes us think of restrictions.  But in reality it provides us with freedom.  You see, when you allocate your spending and saving, something brilliant happens… you get freedom.  Let me explain.  The budget you establish (step 1 create it) and then track each month (step 2 record it) gives you useful information that allows you to have exact knowledge of where the $ is going (step 3 analyze it).  This knowledge then gives you the power to make intelligent and wise spending choices (step 4 choose it).  Confidently choosing how to spend your money; this is where the freedom lies.

A solid budget is the foundation of all good financial planning!

Here are some great resources to help establish a budget, accurately track it and make wise spending choices:

• For those who like mobile/web access (also free): Mint.com
• For those who want software: Quicken books
• For those who prefer paper: Printable budget worksheet

To your financial freedom,

Luke Fields, CFP® Links are being provided for information purposes only.  Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the  listed websites or their respective sponsors.  Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members

Launch of Stewardship Cents, Managing your finances

Managing your financial life My grandfather taught me many invaluable lessons during his life, all which I carry with me every day.  He imparted to me the value of a hard earned dollar through his work ethic, the importance of knowing where every cent was going (the definition of “frugal” in old man form) and the wisdom he utilized in his investments.  These traits intertwined with common sense principles and savvy business skills allowed him to manage his financial life very well. It is my belief that like my grandfather, we all need to be wise with what has been entrusted to us and employing common sense can help us be good stewards.  Stewardship is a belief of responsible overseeing and preserving of important resources. Welcome to Stewardship Cents. My Commitment In this, the first of my regular posts, I want to make a commitment to you; to strive to provide you with: Relevant financial principles :   insightful material focused on the significant decisions we all encounter in our lives. Solid planning strategies: highlighting what I term the “so whats” of life… So what does this mean to my family, my business, my retirement, and my legacy?  Solutions you can apply and concepts to make certain are in order for your family. Learning through personal examples and stories: as I did from my grandfather are a tremendous way to learn and remember key principles. Thank you for this opportunity to share with you through Stewardship Cents. To your financial freedom, Luke Fields, CFP® About Stewardship Cents Stewardship Cents exists to Educate, Entertain and Enhance the financial wisdom of all who read it.  Everyone needs to be wise with what has been entrusted to them and common sense can help us be good stewards of all that we have.  Stewardship is a belief of responsible overseeing and protecting of important resources. Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981.  A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a CERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses.  He resides in Columbus, OH with his high school sweetheart, Beth and their three children.  Luke is an active member of his church, serving in leadership and finances. Follow additional insights and connect on LinkedIn, Facebook, his blog or Twitter. You can always reach him with comments or questions at: luke.fields@raymondjames.com. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC