Empower yourself with this strategy for financial independence, early retirement, and peace of mind.
More than a hot trend, FIRE investing principles have been guiding wealthy, independent people towards financial independence and early retirement for many decades. Implementing the Financial Independence Retire Early strategy takes discipline and commitment.
In this video, Towerpoint Wealth’s President, Joseph Eschleman, lays out the basics of this financial strategy. Click on the video image below to watch the video.
Consider: are you optimizing your lifestyle? Are you saving aggressively? Are you investing strategically? Will you be able to maintain a sustainable withdrawal rate post-retirement? These are essential pieces of the financial independence early retirement (FIRE) financial strategy.
Developing a customized financial and wealth management plan and strategy now will help you advance towards your personal and financial goals, grow net worth, and ultimately help you retire on your schedule. Time is money. Partnering with an advisor that understands you means you may spend less time worrying about this aspect of your life.
Are you curious about whether a FIRE investment strategy could work for you? Towerpoint Wealth serves clients primarily in the Northern California region with an annual household income exceeding $250,000. Please contact us with any questions you have about our wealth management process.
A 2020 survey from Schwab Retirement Plan Servicesfound that the average worker expects to need roughly $1.9 million to retire comfortably. Is $2 million enough to retire? Is retiring with 2 million dollars a reasonable goal? There certainly are a myriad of moving parts involved in answering the question of whether retiring with 2 million is enough, and a number of things to consider.
Is $2 million enough to retire if you plan to live off interest alone? Is $2 million enough to retire if you plan to embark on expensive hobbies? Where you will live, and how? What will you need to cover health costs? These are just some of the financial complexities when you consider retirement.
Whatever the number you settle on as “enough,” click below for five steps you can take immediately to build and protect your net worth.
Are you looking for a high quality financial advisor? There are literally thousands of people who hold themselves out as financial advisors just in California alone. How can you possibly figure out who is right for you? What questions to ask when hiring a financial advisor.
Don’t be overwhelmed in your search hiring a financial advisor or wealth manager. Just start with six important questions to make sure they are the best fit for you, your life, and your financial situation.
Hiring a financial advisor shouldn’t totally stress you out. But you know the benefits of hiring a financial advisor, and your financial future is serious business. They need to have your best interests front and center. This is the definition of fiduciary.
Six questions to ask when hiring a financial advisor
How do you know you are talking with a high quality financial advisor?
Trust
Do you trust them with not only the personal details of your financial accounts but also with the personal details of your life? A high quality financial advisor engenders trust.
Experience
Do they have a history of successful performance and a network of happy clientele who are willing to step forward and vouch for their professionalism and knowledge? A high quality financial advisor has experience.
Fiduciary Standard of Care
Are they legally bound to serve in your best interests? The definition of fiduciary is that they aren’t beholden to the company that employs them or to a service provider (such as an insurance company) in order to earn an income. A high quality financial advisor acts as a fiduciary.
Finding out whether a financial advisor has these basic three requirements—trust, experience, a responsibility of fiduciary care—are the reasons for asking a potential financial advisor the six questions. Questions 1 and 2 speak to their experience and trustworthiness. Questions 3 and 4 speak to whether they will 100% of the time be acting in your best interests rather than their own—that they meet the definition of fiduciary. Questions 5 and 6 assure that the services they provide match your needs and your philosophies.
Here are the six questions to ask when hiring a financial advisor
1. What is your education and experience? 2. Do you have any compliance or regulatory infractions? 3. Are you required by law to operate within a fiduciary or suitability standard of care? 4. How exactly are you compensated? 5. Do you provide comprehensive financial plans? 6. What is your financial planning and investment philosophy?
If the advisor you’re interviewing doesn’t answer these six questions in an articulate way, you may want to continue your search.
What does a financial manager do? Helps you better manage and coordinate your financial affairs, obviously. Breaking this down, the point of finding a fiduciary financial advisor with experience, and who you trust will be a good partner for you increases your odds of successfully growing and protecting your net worth and assets over time, especially these days with how unsettled the markets, economy, and politics all continue to be.
If you’re looking for a new financial advisor—even if you’re currently working with one—asking them these six questions to ask when hiring a financial advisor, and doing your due diligence to assure they’re answering truthfully, will help you ensure you’ve got the right financial advisory partner on board.
Are you considering hiring a financial advisor? Do you think that our Sacramento wealth management firm might be a good fit? Please, use this link to set up a no-obligation consultation.
Most investors know, exposure to real estate in a financial portfolio provides opportunities to grow net worth. In America, there are basically two tax systems: one for those in the know, and one for those not in the know. What you don’t know CAN hurt you.
Towerpoint Wealth Management President Joseph Eschleman and Associate Wealth Advisor Megan M. Miller recently presented “The 9 Tax Planning Secrets Real Estate Investors Wish They Had Known” to the West Sacramento Real Estate Investment Meet Up group. Here is a recap of the presentation, and the nine tax tips for real estate investors.
Would you like to discuss your specific scenario with us?
Are income taxes dragging you and your portfolio down, and at the same time reducing your real overall return?
Do you know how much you are paying in fees and investment expenses?
As an investor, what exactly are you supposed to do to reduce and manage expenses and income taxes? They are unavoidable, and will always be part of your net worth building journey.
However, there is definitely good news – both of these necessary evils of investing are controllable, they are minimizable, and there are strategies to help you reduce them.
In this video Joseph Eschleman, President of Towerpoint Wealth, a boutique Sacramento Wealth Management firm, explains nine specific ways to keep expenses and income taxes in check, including:
Five strategies to minimize the impact of income taxes on your portfolio
Four strategies to keep more of your money working for you
Is the United States economy on the verge of slipping into a recession? Or is the exact opposite happening – is the economy continuing to recover, and is more robust than it is getting credit for?
Are we looking towards an economy in recession, or are we more recession proof than many economists believe?
While our economy is by no means recession proof, it should come as no surprise to our clients and to TPW friends and colleagues that we take this volatility with a grain of salt, as we pay attention, but rarely react, to these short-term movements. Is a recession coming? Perhaps, but there is anything but consensus on what happens next.
What we do know is this:
1. While the economy is by no means recession proof, economic expansions tend to be much more robust than recessions.
2. Even if we are facing an economy in recession, that over the past 73 years, bull markets have lasted longer (50 months, on average) than bear markets (13 months, on average), and have more than made up for periodic market declines.
This all begs the question: If we are facing an economy in recession, what can YOU do to recession-proof your portfolio?
Watch this educational video for FIVE specific strategies to help you recession proof your portfolio, even if we are facing an economy in recession!
Compensation packages for directors, VPs, software engineers, or other employees of technology based firms almost always contain restricted stock units, or RSUs. If you own RSUs, you may be asking one or more of the most common questions about RSUs:
Maximize stock compensation | RSUs in your compensation package can become a substantial part of your overall net worth.
Maximize stock compensation and RSU selling strategy
RSUs, also commonly known as restricted stock units, are a form of stock compensation, whereby an employee receives the right to own shares of stock in the company they work for, subject to certain restrictions. Initially, these units do not represent actual ownership, however, once the restrictions are lifted and your RSUs vest, the units convert into actual company stock, and you, the employee, then own the shares outright.
The “restricted” in RSUs is generally based on a vesting schedule. Most vesting schedules will fall into one of two categories: Time based or performance based.
When most people think of stock compensation they typically think of vested stock OPTIONS, or the right to buy a company’s stock at some future date, but at a price established TODAY.
RSUs and stock options have some notable differences. (More about stock options vs RSUs in our white paper, link below.)
How are rsu, restricted stock units, taxed?
RSUs are taxed when the restriction lifts, at which time shares vest and become part of an employee’s taxable income, taxed at the fair market value of the total amount of shares that vested. The taxation of restricted stock units is identical to normal wage income, included on an employee’s W-2.
The shares of vested company stock are subject to federal, state, and local income taxes, as well as Social Security and Medicare taxes.
When an employee sells their vested stock, they will pay capital gains tax on any appreciation over the market price of the shares on the date of vesting. If the shares are held longer than one year after vesting before being sold, the sales proceeds will be taxed at the more favorable long-term capital-gains rates.
RSU selling strategy to mitigate the tax burden | RSU tax selling strategy
While you must pay ordinary income taxes when your RSUs vest, and also must pay capital gains taxes upon selling appreciated RSUs, you can mitigate the tax burden. Targeted charitable giving, utilizing capital losses to offset capital gains, and outright gifting of vested shares are three ways.
When can RSUs have a negative effect on your net worth? Does your RSU selling strategy grow net worth?
While restricted stock units complement a traditional compensation package, and can contribute to your net worth, there are risks involved in managing RSUs.
The primary risk is that you have too much of your net worth concentrated in one individual stock, and one individual company.
Bitcoin is by no means new –if you can believe it, it has been more than 13 years since the digital currency officially launched! As of June 2021, more than 220 million people owned digital assets. The blockchain technology that supports it continues to prove its value. Last year, Bitcoin settled over $13.1 trillion in transactions, up 470% from 2020, a figure that represents over half of the US’s GDP for the year, and more than what Visa, one of the largest payment processors in the world, settled last year. This bodes well for the cryptocurrency future!
Throughout history, civilizations have used cattle, squirrels, jewels, wine, and seashells as money. And before sovereign currencies took hold, gold was the medium of trade for many nations (and to this day still is a very good store of value). Compared to gold, Bitcoin is a baby, and many other cryptocurrencies are still in their infancies. However, each day crypto remains accepted, active, secure, and continues to grow in popularity and usage, it will become more and more mainstream. To be clear, bank notes and credit cards were not made for today’s digital age – but crypto was!
Global finance is moving away from being centralized (money being held by banks, which have the goal of earning profits) to being decentralized, where blockchain technology eliminates the need to use profit-seeking intermediaries and third-parties to lend, spend, trade, and borrow. As a group, both Millennials and Gen Xers have a much higher level of interest in decentralized finance and a lower level of trust in traditional institutions. Now, 83% percent of millennial millionaires own digital assets. Over $68 trillion is set to be transferred from Baby Boomers to Millennials and Gen Xers over the next 25 years.
We believe that the adoption of cryptocurrency will be much like the adoption of other successful technology: It usually starts off slow and measured then quickly accelerates! Consider the internet: In 10 years, the internet growth went from a handful of users to practically the entire world. In 2021, consumers spent more than $871 billion online, a 44% increase from 2019. A digital future likely means a cryptocurrency future.
In the past two years, the US created 29% percent of its current money supply. Governments and central banks around the globe create money when they need it. The result? Monetary, price, and asset inflation. But Bitcoin has programmed scarcity–one of the benefits of bitcoin is that its supply cannot be manipulated or devalued by fiscal or monetary policy.
Questions about how to integrate crypto into your longer-term investment portfolio? We welcome opening an objective dialogue with you about the advantages, disadvantages, risks, and considerations involved. Contact Towerpoint Wealth
For virtually all investors, 2022 has been a challenging and frustrating year. Persistently high inflation has resulted in an environment of quickly rising interest rates, leading to a “double-whammy” of twin selloffs across both stocks and bonds. After increasing more than 31% in 2019, 18% in 2020, and 28% last year, the S&P 500, an often-cited proxy for the stock market, has declined more than 20% year-to-date in 2022 (as of 9.23.2022). And to make matters worse, the bond market, as measured by the Bloomberg U.S. Aggregate Bond Index, has suffered through declines not experienced in more than 50 years. Put differently, investing in conventional stock and bond asset classes has not worked very well so far in 2022.
Not surprisingly, these declines have led to an increase in demand for “supplemental” investment opportunities outside of these traditional areas, and have led more and more people to inquire about alternative investments.
Put simply, an alternative investment is any financial asset that does not classify as a traditional stock, bond, or cash. While they can vary widely in their accessibility and structure, alternatives can provide an opportunity to 1.) boost returns, 2.) generate income, 3.) provide potential tax benefits, and 4.) reduce risk in a portfolio. Institutions like pension funds and endowments have been utilizing them for years, and today, more and more individual investors are questioning why they have no alternative investments, and whether they should change their plan to include them. Watch this video to learn answers to the following questions:
What are alternative investments?
Is it important to have exposure to “alts” in your current portfolio?
Is it bad if you do not own any alternatives?
I heard alternative investments can be expensive – is that true? Does it matter?
What are the risks and benefits of adding alts to your investment strategy?
If you would like to learn more, click the thumbnail below to watch our recently-produced webinar about alternative investments.
What is the definition of fiduciary financial advisor, and why should you care? Here are 3 common considerations when deciding whether to partner with a fiduciary.
Duty of fiduciary financial advisor
Do you know that the only requirement a person needs to meet to be called a “financial advisor” is that they dispense financial advice? It’s true.
While it is also true that most financial advisors at major Wall Street firms—also called “wire-houses”— WANT what is best for you, it is important to understand that that they are employees first, and their FIRST professional obligation is to their employer, and NOT to you.
They are only required to do what is suitable for you, and they are bound by what is known as the “suitability standard of care.” They specifically are NOT legally required to act in your best interests 100% of the time. Put differently, they do not have the duty of fiduciary standard of client care.
In this video, Joseph Eschleman, the President of Towerpoint Wealth, an independent boutique wealth management firm, presents three important facts about how engaging a financial advisor specifically with a legal fiduciary responsibility should tilt the odds of success in your favor.
What is a fiduciary financial advisor – Definition of fiduciary
A fiduciary financial advisor is legally responsible to put their clients’ personal and financial interests before their own, and always act in their clients’ best interests, 100% of the time. Three things to consider when choosing between a wirehouse or independent fiduciary financial advisor:
The suitability standard, or simply doing what is suitable for a client, is much different than the fiduciary standard, or being legally bound to always act in a client’s best interests.
Investment brokers who work for broker-dealers (such as Merrill Lynch and Wells Fargo), and investment advisors who work for fully independent registered investment advisory (RIA) firms like Towerpoint Wealth, both offer financial, wealth, and investment planning, counsel, and advice.
However, they are not governed by the same professional standard.
Fiduciary advisors work directly for clients, and must place clients’ interests before their own, according to the Investment Advisers Act of 1940. They have the duty of fiduciary care. Investment brokers work for, and first serve, their broker-dealers, and must only ensure that their recommendations are suitable for their clients – this is known as the suitability standard. A financial advisor with fiduciary responsibility provides fee transparency, client-centered advice 100% of the time, deals with no competing interests, and is able to draw from a much larger pool of higher quality investments.
2. Breach of Duty—Legal Recourse
A breach of fiduciary duty occurs when it is proven that a financial advisor failed to act responsibly or in the complete best interests of a client. Usually, the actions are alleged to have benefitted the advisor’s interests, or the interests of a third party, instead of a client’s interests.
You have legal recourse in the case of a breach of fiduciary duty only if you are working with a fiduciary financial advisor.
3. Wall St. Investment Corp. vs Registered Independent Advisory Firm
If you have a relationship with an advisor who works for a major Wall Street firm, you do not have a fiduciary financial advisor. At Towerpoint Wealth, we should know – we worked for a major Wall Street firm for 18 years! It is impossible for anyone to act in a client’s best interests 100% of the time when operating within the constraints of the employee-employer relationship.
Now that you know the definition of fiduciary, it is important to understand that no designation, rule, or regulation will completely stop individuals who have intent to defraud other people. Despite this sad fact, engaging a financial advisor who has a legal fiduciary responsibility to you, like all of us here at Towerpoint Wealth, tilts the odds greatly in your favor.
