A penny saved is a penny earned and penny-pincher are two common terms that are used to describe someone that is most likely frugal. I would admit I am one of those individuals that aspires to both phrases – and it’s not out of accident. I am one of those folks who will pick up a penny (heads or tails showing – no superstitions here) when walking down the street and put it in my pocket. That penny, nickel, or quarter (in rare cases a one-dollar bill or even higher) will usually make its way into my piggy bank or more likely one of my daughters’ porcelain pigs. I pick up the loose change for one of two reasons: It’s literally free money. To not pick it up is asinine. Little amounts add up. Think of it this way – a penny is 1% of a dollar. A dollar is 1% […]
fee-only
Annuities – Fees, Expenses, and Taxes
Last week we covered some of the differences in annuities and the various types of annuities someone can purchase. In our final annuity installment (no pun intended) I want to explain some of the fees and expenses that some annuities and annuity providers employ. As mentioned in my first annuity article annuities are an insurance product – insuring against living too long. Most companies that offer annuities will charge for this insurance by means of what are called mortality and expense charges. M&E charges can be as low as .25% to as high as over 2%. These charges are the expenses the annuity company charges to the entire risk pool of policyholders in order to pay for the few that will outlive their life expectancy. Most policyholders and annuitant will not outlive their life expectancy and thus pay for those that do. M&E charges will also help the annuity company […]
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Types of Annuities
Last week I explained a bit about annuities and am following up this week on the different types of annuities and way to contribute. When a person is contributing to an annuity they are building or increasing the number of accumulation units they buy. As the money in the account builds so does the number of accumulation units. During the payout phase the accumulation units convert into annuity units. The number of annuity units remains the same for the remainder of the annuitant’s lifetime. When it comes to annuities there are a few different kinds that are available. Potential buyers can choose from variable annuities and fixed annuities. Variable annuities allow the policy holder to contribute premiums and then have those premiums allocated to different sub-accounts that invest in various stock and bond mutual funds. The value of the annuity goes up and down with the general fluctuations of […]
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The Other Life Insurance – Annuities
The last few weeks I have been writing about the more conventional form of life insurance that most people are familiar with when I say ‘life insurance’ – which is protection against a premature death. The other life insurance is that which protects your from living too long – and that insurance is the annuity. Over the years annuities have gotten a bad rap – and rightfully so. Like life insurance, annuities are generally sold to the public via a sales force of licensed agents. In most cases, they are not the right vehicle for the individual (I know I am setting the blog up to receive the thunderous rebuttals) but there may be cases where an annuity makes sense. The other reason annuities get a bad rap is because of the pure insurance (longevity) feature that they provide – especially pure life annuities. A pure life annuity is simply […]
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Life Insurance is Not an Investment
Last week I seemed to cause a bit of a kerfuffle when I wrote about which life insurance may or may not be appropriate for the general consumer. For the readers that sent in emails and comments – thank you! It’s much appreciated and we enjoy the feedback. Twitter was also flitting and chirping with the commotion. In particular, the discussion really narrowed down to, and most of the comments we received were regarding the comment I made on life insurance not being an investment. And that’s still true. It’s not. Now there are plenty of people that will argue with me that it is an investment for this reason or that. For this writing I am hoping to explain and to clarify what I meant as an investment. From a pure investment standpoint – meaning saving and investing one’s money for retirement and or college or just saving and […]
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What is the Best Life Policy to Buy?
When researching the appropriate life insurance to buy individuals and couples are faced with a myriad of choices. Term, whole life, universal life, variable universal life are just a few of the policies that may be presented, if not sold, to the person. So which one is best? Generally, it depends. If someone is looking for the best bang for their buck and wants to purchase the most insurance for the least amount of money term is going to be the best bet. Term is cheap, builds no cash value, and is generally used if someone or couples have a time frame where they need insurance (30 year term for a 30 year mortgage or 30 year term until retirement age). Generally those that are interested in term know that it will run out, but are hoping to “self-insure” their death at retirement since in theory they’ll have saved enough […]
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A Note About Designations
As you begin to seek advice regarding your savings and investments, you may come across professionals that have designations after their names – some might even have a can of alphabet soup! Here are some common designations you’ll encounter when seeking out a professional. Your advisor should have a qualified designation as a minimum requirement before you start working with him or her. CFP® – CERTIFIED FINANCIAL PLANNER™. This designation is considered the “gold standard” in the financial services industry. Holders of this designation are required to take college-level financial planning courses, have three years’ experience in financial planning, and must pass a rigorous 10 hour, 2 day examination. The designation is owned and awarded by the CFP Board of Standards. www.cfp.net ChFC® – Chartered Financial Consultant™. This designation is right in line with the CFP® with regards to the knowledge needed and required to earn the designation. Professionals that […]
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Baby Steps
One of my favorite movies has to be What About Bob? starring Richard Dreyfus and Bill Murray. Fans of the film will remember Bob Wiley, a neurotic, compulsive individual who seeks out the advice and care of Dr. Leo Marvin. The title of Dr. Marvin’s book that he gives to Bob is called Baby Steps – with the idea that anything is manageable and possible if you take baby steps. Baby steps are important in our everyday life. Whether it be pursuing a degree, saving for retirement or even trying to change or break a habit – you need to take it one step at a time in order to achieve the goal. And sometimes, just moving forward even at a snail’s pace is progress. Take saving money for example. Some people may think it’s tough to save, especially if they fill their budget is tight enough already. But these […]
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There’s No Free Lunch
Recently I had the opportunity to review a company’s website and some of their affiliations that they had with particular companies. My natural tendency is to look at what companies the firm recommended when it came to financial advising and investing. As I was perusing through the list of providers my eyes came across a rather intriguing headline that was given by one of the “preferred” vendors. The headline read, “Free Financial Plan – Over $1,000 Value!” Some of you may be wondering the same thing I was wondering: “Who in their right mind would give away $1,000?” Instantly I knew there was a catch. After doing a bit more research I found out that this “preferred” provider’s strategy was to simply create a “financial plan” that was geared toward having the clients invest and put money in financial products that paid high commissions. The take away from the article […]
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Do Advisers Practice What They Preach?
With a cornucopia of information available to us regarding investing, financial planning and money management making a choice between who’s right and who’s not even in the same area code may come down to what your personal preferences are, and just as important, if the person giving the advice practices what they preach. In a previous article, I spoke about how advisers get paid and the type of advice or products they may recommend depending on how the advisor gets paid for that advice. In this article I want to expand a bit further to whether or not the advice you’re getting is really being followed by the person giving it. Admittedly, there is some advice that may need to be given that may not pertain to the adviser giving it. One area may be debt reduction advice if the adviser doesn’t have any debt (but has practiced good money […]
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A Stable Pyramid
One of the basic fundamentals regarding financial planning and saving money revolves around what is known as the financial planning pyramid. You may hear other names such as the wealth management pyramid, the financial house, etc. You may also see different stages or “building blocks” added here or there, but I’ve broken it down for the purpose of this book to three basic levels for easier understanding. The first level is where we see risk management. This is the foundation of your plan. It’s important to have a strong base to build off of, otherwise the slightest of breezes or tremors can send it toppling. Risk management can be simply seen as your insurance – and this can range from your auto, home, renters, life, health, disability, and umbrella insurance, to your will, emergency fund, and debt management. The reason why insurance is the base is due to the fact […]
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Fees
What you see is what you get – or what you don’t see is what you get. As you start or continue to invest and save for college, retirement, weddings, vacations, and other goals it’s important to know the underlying fees and charges of the products and funds that you’re in. Very often these fees are buried in the minutia of a thick prospectus or in the fine print of your account statement. Fees are necessary, but excessive fees aren’t. You should be getting what you pay for – but that can be hard if you don’t know what you’re paying. Let’s take mutual funds for example. On one end you have fees and expenses going to the fund and the manager to try to do the best with your money – which is to earn a decent return (positive or negative) and hopefully beat their benchmark. This is typically […]
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How Financial Advisers Get Paid
As you begin your search for a financial professional it’s going to be important to know how the particular professional you choose will get paid. It will also be important to ask questions not only in regards to their compensation, but who actually pays the adviser. There are generally three ways in which financial advisers and planners get paid. Commission: An adviser that’s paid on commission generally gets paid based on the underlying product they sell. Commission rates vary depending on the product sold – anywhere from 5% to 50%. Term Life insurance for example, will have roughly a 40% commission rate on the annual premium for the first year. Whole Life insurance is generally 50% the first year. The difference being Term Life may have an annual premium of $1,000 where Whole Life may have an annual premium of $5,000. It can be difficult to be objective when an adviser can make $2,500 versus $400 […]
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Why Hire a Professional?
Throughout our lives as different life events happen and the need for help arises we have the opportunity to rely on ourselves to get the tasks done, or entrust in the skill and expertise of a professional. Very often there’s a fine line as to what we’ll bother doing ourselves or to whom we’ll hire and delegate the job. For mundane tasks, the tasks that we know we can do ourselves with little to no effort, it’s second nature for us to roll up our sleeves and get the job done. Examples of this include washing the car, cleaning the house, balancing the checkbook, bandaging a small cut, and doing the dishes. It’s rare that we’ll “contract out” these tasks as they are very limited in the expertise needed to get them done, and from a frugality standpoint, most of us are willing to accept the trade-off of doing the […]
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Why Designations Matter
Throughout my career I have had the occasion to talk with several financial advisors, planners, insurance agents, brokers, and other industry professionals about some of the reasons why people choose to pursue or not to pursue designations. I have heard differing views on the topic and thought I’d share some of my insights as to why I chose and still choose to pursue designations and degrees. Before I do, let me start by talking about some of the reasons why the advisors I have spoken to decide not to earn a designation. More often than not, the typical answers that I receive are not having enough time, not sure which designation to pursue, lack of funding to afford the designation, and lack of support on earning the designation – either from their employer or family. On the latter two points, some companies may not be able to “support” the designation […]
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Financial Planning Pyramid: Foundations
You can’t build a house from the top down, right? Like most solid structures, they start with solid base, a firm foundation. Some of the biggest skyscrapers are started below ground level, well beyond what’s in our view when we look at the behemoths of structures. Can you imagine a skyscraper built on just a foundation of concrete? The first strong wind or tremor would send it toppling. The same process can be applied to financial planning. You have to have a solid base, a firm foundation before you can think about building a portfolio, estate planning, etc. Generally, the financial planning pyramid starts with the base known as risk management. This includes such risks as auto and home insurance, an emergency fund, life and disability insurance, and a will. Having this solid base protects you from many risks in life, but also protects your plan and your money that […]
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Financial Autonomy
Recently, I had the opportunity to sit across from a couple nearing retirement, and looking for some options with regards to their cash flow needs, possible retirement dates, and the ever-present question, “Do we have enough?” Typically, these conversations involve careful consideration given to a number of different worries, fears and “big” problems that clients face. Frequently I will work with couples who have a hard time agreeing on how much they can spend in retirement, how much the can afford to save, and where to prioritize and allocate the money (to retirement, a wedding, college, etc.). This couple, however, was different. Well in position to enter retirement comfortable with little, if any to worry about, the tension between these two spouses could be cut with a knife – it was almost tough to sit through. One would snip at the other, and the other would interrupt while the snipping […]
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Book Review – Backstage Wall Street
This was a good book, I truly enjoyed reading it. The primary reason that I enjoyed it so much is because it’s the book I have been hoping to find from someone like author Joshua Brown: a book that tells the truth about what’s really going on on the seamy side of Wall Street (which is the only side, to be truthful). Joshua Brown (TheReformedBroker.com) provides a unique perspective – that of someone who has been involved in the “inside” of wirehouse broker-dealers, but who has since seen the light and moved on to a career in independent investment advice. As such, Mr. Brown has seen the worst of the worst, in terms of how these institutions treat the investing public. Once he became aware of how it all worked, through a great degree of soul-searching (and a whole lot of gumption), stepped away from it all and has never […]
Sterling Raskie, MSFS, CFP®, ChFC®
The latest in our Owner’s Manual series, A 401(k) Owner’s Manual, was published in January 2020 and is available on 
A Medicare Owner’s Manual, is updated with 2020 facts and figures. This manual is available on 
Social Security for the Suddenly Single can be found on Amazon at 
Sterling’s first book, Lose Weight Save Money, can be 
An IRA Owner’s Manual, 2nd Edition is available for purchase on Amazon. Click the link to choose the 
Jim’s book – A Social Security Owner’s Manual, is now available on Amazon. Click this link for the 
And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.