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Estate Planning: Stock Inheritance

Estate Planning: Stock Inheritance

Q: I inherited a few shares of stock in a couple of different companies as part of my father’s estate. These shares have been transferred out of his name and are being held in an estate account. I am the executor. After the stocks were transferred into the estate, I requested that they be sold for probate. All the companies complied except for one who is trying to force me to use their subsidiary company to broker a sale because they do not handle direct sales themselves. The problem is that they want 20% to broker the deal! How can this be handled without paying such a high commission?

A: It sounds like this is a private company investment. Assuming that is correct, and it is not publicly traded, then they may have their own rules concerning the sale of company shares. I would ask for a copy of the investor agreement your father entered into or whatever the documentation is that they are basing their broker mandate on to review for accuracy. If you are requesting the broker restriction be removed, and this is a private company, I’d imagine the onus would be on you to secure a buyer, so that is something to think about as well.


How To Double Your Money

Everyone says you should invest because it’ll help to grow your money, but let’s back this up a second and look at how it really works. Investing in the stock market yields various returns, and any investor, professional or not, will tell you that the future is never guaranteed. That’s why it’s best to invest money that you most likely will not need for several years.

With that said, one of the best investors of our time, Warren Buffett, several years ago in the aftermath of the financial crisis was quoted saying that investors should expect a return of 6 – 7 percent a year. That’s despite the S&P 500’s long term average of about 10 percent per year over its history (1928 through 2014).

The likelihood of achieving high single digit (to double digit) annual percentage returns is why people invest in the stock market for their retirement. Beyond your emergency fund, why would you put money that you aren’t planning on touching for 10, 20 or 30 years into savings account that can’t even keep up with inflation? According to today’s average money market rate in America is 0.09 percent. With inflation rising at approximately 2 percent year over year, socking away your retirement money into a savings account means you’re actually losing money!

What’s even crazier, there is a new app coming out called Digit that will help people with saving automatically, which is great except that users don’t earn any interest on their savings at all!

As new technology like this continue to pop up, it’s important to think through exactly what you’ll be using your savings for, and to make sure it’s in an account that allows your money to reach its full potential.

By investing money into the stock market your savings should be able to handily beat inflation over time. It seems like a no brainer, right?

Clearly it’s important to invest rather than just letting your money sit in your savings account when possible. If hearing 7 percent doesn’t get you excited, though, you can instead calculate how long it will take for your money to double at this rate.

The ‘Rule of 72′ is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to increase 100 percent.

For example, the rule of 72 states that $1 invested at 10 percent would take 7.2 years ((72/10) = 7.2) to turn into $2.

Now thinking about this in terms of Warren Buffett’s belief that you’ll receive 7.2 percent a year, that would mean if you invested $10,000 at 7.2 percent it would take about 10 years to turn into $20,000 ((72/7.2) = 10).

Okay, now what if you have your $10,000 in a savings account that (let’s be generous) is yielding 1 percent a year? It would take you 72 years to double! ((72/1) = 72). That’s a 60 year difference from investing!

The ‘Rule of 72’ is just math. However, it’s an extremely helpful rule of thumb to put the marathon of investing into perspective. Okay, if I make 6 percent per year how long will it take your $50,000 to reach $100,000? 72 divided by 6 equals 12, so at that rate your money doubles in 12 years.

What about 9 percent per year? 72 divided by 9 equals 8, so at 9 percent per year your money doubles every 8 years. Get it?

If you’re looking to talk with someone, I would suggest heading over to, set up a financial “game plan”, or have a chat with one of the team. Wela offers free financial guidance for your big picture financial goals i.e. Saving for college, paying off your mortgage, allocating your 401k, and hitting certain investment asset goals.

No one gets rich overnight (expect lottery winners), but using the ‘Rule of 72’ will help you wrap your arms around just how long a double might take.

Read the original article here. 


Would You Trust a Robo-Advisor with Your Money?

A few weeks ago I went to Schwab Impact in Denver, which is a conference for investment professionals and money managers. I was fortunate to listen and learn from some of my favorite people in finance like former Fed Chair Ben Bernanke and legendary investor Mario Gabelli. I couldn’t help but notice, though, that the topic that everyone wanted to talk about at the conference was “robo-advisors.”

Robo Advisory firms are a relatively new concept, emerging only a few years ago in the investment industry. A robo-advisory firm attempts to replace a traditional person-to-person interaction with algorithms and digital technology. Instead of sitting down with a financial planner at their office, a robo-advisor facilitates your investment planning primarily through your desktop or mobile device.

The way these programs typically work is that they have you open an account based on a questionnaire, and then based on your answers the algorithm tells you what assets you should be invested in. Typically these are five to ten EFT’s, and you can either take that initial advice and invest in those ETFs yourself, or you can “hire” them to use their automated system to trade, invest and re-balance your portfolio.

These often have a low-cost at somewhere between 0.25% up to 1% of your total invested capital for the year. The difference in cost typically depends on how much human interaction you receive from the company. The lower the cost, the more likely it is that you’ll only be working through your iPad.

I’m a huge believer in technology. It’s made my job easier and more efficient, so why shouldn’t it be passed on to investors? I think there’s a natural progression taking place right now in the financial industry towards offering more technology-forward options, just as there is with almost all other industries. Just think about Uber (remember my post about the Uber Economy)? Who would have guessed five years ago that technology could make finding a ride so easy?

While we’re moving towards more use of technology in the financial industry, though, I don’t think it’s time to completely discount the traditional method of meeting with a real live financial planner.

Imagine removing a “live person” in the following situation: Let’s say there is a wonderfully intelligent video program that acts as and replaces a teacher in a classroom. Effectively removing a “real live” teacher, and replacing them with technology. We now have videos based on the fundamentals of education to teach your child from kindergarten to college graduation.

While in theory this could work, it most likely would not work for everyone. If circumstances were perfect — every student full with a good night’s sleep and eager to learn — then everyone in that classroom could potentially do well.

However, we all know that’s not how life works. What happens when two children get into a fight, or one falls asleep because they stayed up too late? What about the child who has parents fighting at home and can’t focus? These are issues that can’t be addressed and corrected for by a digital video screen that teaches reading and math.

While this might sound unrelated to the investment industry, it’s actually very similar. A financial advisor or planner is there to teach, guide, and coach their clients though the most straightforward and complex times of life.

When the market starts acting up, it’s easy to get distracted, get off track, and make bad investment decisions. For most people, money (especially our life savings) is very much tied to our emotions. So when we become concerned about the world, the stock market, or a particular life event that impacts our financial situation, I believe that humans will need more than just an algorithm to turn to.

That being said, the robo-advisory industry isn’t going away. Going back to my teacher analogy, I’d say that we’ll be learning from interactive videos on a big screen, but we’ll still need a teacher in the classroom.

My company actually launched a program named Wela more than five years ago. In the past two years our team has been building Wela to compete with the newly emerging players from Silicon Valley. We’re not working to raise hundreds of millions of venture capital dollars to promote it, but instead we’re just trying to raise awareness in our local Atlanta market.

I think that everyone should have access to financial advice and information without having to pay high premiums. While Wela is a “digital advisor”, we still believe in a personalized experience. So Wela is trying to bridge the gap between having a personal tutor and being left in a classroom alone with a screen.

I’m sure in the next few years we’ll continue to hear more and more about robo-advisors. I’m glad there’s an entirely new industry based upon this new technology. I think it’s important to remember right now, though, that these newly emerging programs account for just $5 billion out of a multi-trillion dollar investment industry in the US. So right now the robo industry is the size of an ant relative to the elephant that is Wall St. and financial advice business, but this digital ant definitely has some bite.


Disclosure: This information is provided to you as a resource for informational purposes only. It is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal. This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.


Read the original article here.


Moss Tells Mainstreet How To Retire With a Strong Nest Egg

In today’s economy, 75% of retirement age Americans have less than $30,000 saved and one in six older Americans live on less than $22,500 a year.

So how can you avoid falling into either of those buckets. In a recent interview with Mainstreet, Wes Moss shared some of the results from his study on how some retirees are exiting the workforce with a strong nest egg and are retiring “happy”.



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