BFSG Blog

Save for Retirement or Pay Off Debt

First Things First: Build an Emergency Fund

Experts agree you should have three to six months of living expenses set aside in a safe, interest-bearing account. What you earn on that money is irrelevant. The main goal or objective of this investment is liquidity. Not having an emergency fund can prove to be a very costly mistake. For example, if you need to replace the brakes in your car, if your rent increases, or if you even lose your job. None of this is predictable. Without an emergency fund most people reach for the high-interest rate credit cards to pay their expenses. This strategy is in conflict with your long-term goal of saving for retirement.

One consideration: A Roth IRA. The Roth is unique, in that any contributions you make to a Roth can be withdrawn without penalty or taxes. The caveat is that any earnings in the account need to remain for five years and you must be 59.5 years old or older (unless an exception applies) for it to be considered a qualified distribution to avoid taxes and a 10% penalty. In turn, you are technically saving for retirement and building a nest egg for any short-term unexpected expenses (i.e., emergency fund). Check out our Roth in Retirement Plans webinar to learn more.

Next: Prioritize Your Debt Load

Maybe you have a car payment, student loans and miscellaneous credit cards. Put together a budget that reflects balances, monthly payments, as well as the interest rate attached to each of the debts. Once you have a clear understanding of your debt load you can then develop a plan to paydown the debts. There are a couple different schools of thought on this. You can either begin by making a “monster” payment on the credit card with the highest interest rate after the minimum payments are made on other debts with lower interest rates. This is referred to as the “avalanche” method and ultimately saves you the most in interest payments.

Secondly, there is the “snowball” method. Here you make the “monster” payment on the account with the lowest account balance. How do you eat an elephant? One bite at a time. The same is true for your debt – break down the debt into bite-sized pieces to make it more attainable and less scary.

There is no right or wrong method because everyone has a unique approach to managing their finances. If you are someone who can sleep better knowing you have completely paid off a debt and no longer owe money to a given creditor then the “snowball” method probably makes sense. Whereas, if you are a numbers-driven person and feel saving more money on interest charges over the long-term makes more sense the “avalanche” method might be for you.

Watch our “Connecting the Dots to Your Financial Future (Part 1)” webinar for learning more about these strategies to pay off your debt.

Wait: My Company Matches My Retirement Plan Contributions

If you are fortunate to work for an employer who matches your retirement plan contributions, then that is free money you should grab. For example, if your company will put in 50 cents for every $1 you contribute that is a 50% return in your account immediately! This strategy should be prioritized over paying down anything above and beyond the minimum payments owed on any debts described above.

The Bottom Line

It really comes down to personal preference. The math would suggest that you should maximize retirement savings while taking advantage of the current low-interest rate environment and potentially refinance debt if possible. However, if you’re someone who sleeps better knowing you don’t owe money to others that works just as well.

A Certified Financial Planner™ at BFSG can work with you to develop a plan designed to help you save for retirement and pay-off debt to achieve your financial goals.

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s web site or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please see important disclosure information here.

BFSG Named One Of Barron’s “Top 100 Institutional Consulting Teams” For 2021

Benefit Financial Services Group (BFSG), a multi-faceted registered investment advisory firm serving both institutional and individual clients, is pleased to announce it has been ranked in Barron’s “Top 100 Institutional Consulting Teams” for 2021. The Barron’s listing can be seen here.

“BFSG serves as a fiduciary with every client and provides written acknowledgement of our fiduciary status. Our team-based approach ensures each of our clients has access to the knowledge and expertise
of our experienced retirement and investment professionals. We are proud that our team is raising the standards in the industry and our deep appreciation goes to our loyal clients and our dedicated professionals,” said Darren Stewart, a Principal, and Senior Retirement Plan Consultant at BFSG.

This annual ranking is performed by Barron’s. Registered Investment Advisors, Institutional Consultants, and Wealth Management Firms complete a questionnaire about their practice. Barron’s verifies the data
with the advisors’ firms and with regulatory databases and then they apply their rankings formula to the data to generate a ranking. The formula features three major categories of calculations: (1) Assets (2) Revenue (3) Quality of practice. In each of those categories they do multiple subcalculations. Barron’s measures the growth of advisors’ practices and their client retention. They also consider a wide range of qualitative factors, including the advisors’ experience, their advanced degrees and industry designations, the size, shape, and diversity of their teams, their charitable and philanthropic work and, of course, their compliance records.

Disclaimer: Awards and recognitions by unaffiliated rating services, companies, and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if the Firm is engaged, or continues to be engaged, to provide investment advisory services; nor should they be construed as a current or past endorsement of the Firm or its representatives by any of its clients. Rankings published by magazines and others are generally based exclusively on information prepared and/or submitted by the recognized adviser. The Firm did not pay a fee for inclusion on this list.

Restore our Earth and Start Reducing Your Carbon Footprint

Today we celebrate Earth Day and sticking to the theme of this year’s Earth Day, “Restore Our Earth”, this blog post is focusing on restoring the world’s ecosystems by helping you reduce your carbon footprint.

Did you know that meat and cheese are some of the most carbon-intensive foods to produce?(1) Globally, 77% of agricultural land is used to produce meat and dairy and according to The Land Report, the meat and dairy industries are on track to be the world’s biggest contributors to climate change, outpacing even the fossil fuel industry. In just the U.S. alone, 41% of U.S. land in the contiguous states revolves around livestock.(2) According to the Environmental Protection Agency (“EPA”), the methane produced by agricultural waste (biomass, inedible crop waste, livestock manure) accounted for 36% of the U.S. total methane emissions between 1990 and 2017. While methane represented about 10% of total U.S. greenhouse gas emissions in 2017, the EPA notes the comparative impact of methane is “25 times greater than CO2”.

Having a balanced diet is just one way to reduce your carbon footprint and we invite you to explore the many other ways you can reduce your carbon footprint by experimenting with the MIT Interactive Climate Change Simulator, EN-ROADS. Click HERE to test out the EN-ROADS simulator.

You may be asking how this ties in with my investments and BFSG? Many of our clients are expecting more than just shareholder returns from the public companies in which they invest. They want these companies to have management and leadership in place that is mindful of the footprint that they leave in the world. We agree companies should uphold their basic responsibilities to people and the planet. Furthermore, we believe exposure to environmental, social and governance (“ESG”) factors can meaningfully impact the long-term sustainability of a company’s business.  We are now proud to say that we have several different new ESG investment strategies to meet our clients’ investing goals and objectives. Whether you are passionate about environmental opportunities that will reduce greenhouse gasses or are looking to invest broadly in companies that meet the ESG criteria, we have a portfolio strategy for you.

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s web site or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please see important disclosure information here.

April is Financial Literacy Month

It is never too late and never too early…take charge of your financial situation!

In recognition of April as financial literacy month, we would like to share our webinar series, “Money Mastery” which can be found at https://www.bfsg.com/bfsg-university/

The webinars provide tips on how to build and maintain good credit, understanding your credit score, strategies to pay down debt and overall insights into creating healthy financial habits. 

George Clason provided us with a key lesson in “The Richest Man in Babylon” which is to “pay yourself first” and, Warren Buffett’s famous quote “Do not save what is left after spending, but spend what is left after saving”, remind us that our expenses should be planned after we have properly saved. 

Watch our financial literacy series to learn other key lessons to build your financial future.

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s web site or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please see important disclosure information here.

How to Develop a Wealth Mindset

Attaining wealth is hard and requires real effort. Below are ten tips to help you develop a wealth mindset based on our client and personal experiences:

1. Wealth is Fleeting

As they say, “easy come, easy go”. Too often we have seen people lose wealth just as quickly as they earned it. Look at those that invested in GameStop (GME) at its highs or other investing fads to see this. Those that typically attain wealth do this over time with great consistency and purpose. Rarely is wealth attained overnight and even more so is it kept if it comes quickly. An interesting study on Lottery winners has shown that it is far harder to keep wealth than it is to earn it.

2.  Aim to Have Just Enough

It can be very frustrating trying to earn a specific number before you feel comfortable about retiring. Working with a financial planner can instead help you quantify the “just enough” amount so you can retire. There is so much more to life than just chasing wealth and do not lose sight of other priorities in life.

3. Develop Wisdom and Knowledge

Many wealthy individuals have several common traits. Studies have shown that most millionaires are lifelong learners and voracious readers. They constantly are committed to learning new things, growing, and improving themselves through reading and experience.

4. Have Active Hands

One of my favorite quotes growing up was from my grandfather who said, “Idle hands accomplish nothing”. The meaning of this phrase was to encourage me to find hobbies and pursue passions. According to a study by A.C. Nielsen the average American watches 4 hours of TV a day. This means most people work and then go home to watch TV. Watching TV is not inherently wrong, but those four hours can be spent to increase your health or wealth. Many individuals that have accumulated wealth often have hobbies where they create something. This could be in music, creating art, writing, or fixing cars. But there is a strong correlation between having wealth and having hobbies that stimulate creativity.

5. Don’t Be Fake

In today’s society, it is heartbreaking to see how many people pretend or try to portray that they have wealth.  Just go to Instagram and you can see the fake pics taken next to cars they do not own or pretending to be on private jets. Do not be discouraged by the fake perception others have. Remember that life is like a book and do not compare yourself to someone else in chapter 20 when you are on chapter 5. Take time to unplug from social media and remember to take care of yourself

6. Be Thoughtful About Debt

It is important to try and have as little debt as possible because not having debt provides tremendous freedom and joy. Having debt is like being a prisoner until that debt is paid off. We are not saying that all debt is bad, but just be smart in how you handle your debt and have an emergency fund for those unexpected expenses.

7. Save Constantly

You cannot build wealth unless you are saving. The earlier you save and the larger amount you save the faster you will build wealth. It should go without saying as it is impossible to attain wealth without saving.

8. Change Your Mindset

Most people work similarly with money. They spend first, save second and give (if at all) last. Many wealthy individuals I have worked with have the exact opposite mindset. For them, the mindset is either save first and then spend or often it is giving, saving, and then spending. Develop that mindset by creating healthy financial habits and instill good financial habits into your kids at a young age.

9. Be Generous

The most charitable people I know are also the wealthiest. Psychologically this does not seem to make sense. You would think of the rich being like Scrooge McDuck and only thinking of themselves first. While there are certainly some wealthy people that have this mindset, the majority of people that we work with are generous people and love to share knowledge, time, and resources for the greater good.

10.  Be Satisfied

If we do not take for granted what we have and enjoy the small things in life, then life becomes more enjoyable. Being satisfied also helps us to keep things in perspective and not lose sight of what is important. Remember happiness is a choice as we learned.

While none of these tips on their own will make you wealthy, hopefully, they can help you to adopt a wealthy mindset, and this will be a valuable resource for you in life.

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s web site or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please see important disclosure information here.