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Have some bonds, not all bonds



May 22, 2013 By

submitted by Michael Garry, CFP®, JD/MBA, Yardley Wealth Management, LLC

I read something pretty distressing in Jason Zweig’s column in the Wall St. Journal last week. In “Here Comes the Next Hot Emerging Market: the U.S.,” Mr. Zweig wrote that according to Morningstar, investors have pulled $22 billion from U.S. stock funds and added $339 billion to bond funds in the last year.  



Those amounts don’t sound like ordinary re-balancing, which we advocate. They sound like many people are still scared to death of stocks and/or are choosing funds by chasing past performance and putting too much money into bond funds.



If you can’t emotionally handle the volatility of stocks, you aren’t alone.

Know, however, that bond funds are not a panacea. Some are risky and will go up and down as much or more than some stock funds.  

Because yields are so low, many investors are buying longer-term and junk bond funds to try to bump up their yields. It hasn’t hurt them so far. That doesn’t mean it can’t or won’t. A swift rise in yields just to normal yields might take some of these funds down 20-30%.

How many people piling into bonds do you think realize that? 



I’m all for having some bond funds. You might want to have close to half of your investments in bond funds.

Doing more than that is probably not prudent. (We buy short and intermediate-term, investment grade, global bond funds that are hedged for currency risk. They won’t react as negatively to a swift rise in interest rates as the bond funds in the last paragraph.)



Figure out your appropriate asset allocation and re-balance to it regularly.

Piling all of your money into stocks or bonds can be a risky strategy, though the numbers suggest that many people are acting without a strategy.  

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Filed Under: Business Notebook, Yardley Voice Columnists Tagged With: , , , ,

Everyone can’t be an expert at everything

April 24, 2013 By

submitted by Michael Garry, CFP®, JD/MBA, Yardley Wealth Management, LLC

If you want to do financial planning right, find an independent CERTIFIED FINANCIAL PLANNER™ professional. Everyone who has subject matter expertise knows pretty quickly when speaking to someone about their subject, whether the other person knows what they are talking about.

I run into some people who have a very good understanding of financial planning and investing. Unfortunately, some of the people that I have met that do their own financial planning and investing have scared me with their recklessness, and it’s usually based on overconfidence in their abilities. Amazingly, the most overconfident people seem to think that they know what to do and that no one else does!

Many of the popular books for consumers tend to oversimplify things and make it seem as if anyone can read a 200-page book and then handle all of their financial planning and investment needs. In some ways, the books do a service when they tell you to avoid the big Wall Street firms.

Unfortunately, the real solution is not to try to handle it on your own, but to find an independent financial adviser who will act in a fiduciary capacity to you.

A problem with using books for subject matter advice for your financial planning and investment needs is that the authors don’t know your situation, and therefore cannot tailor their advice to your needs. Even if they could, there is just too much to put into one book.

The course work to become a CERTIFIED FINANCIAL PLANNER™ professional is thousands of pages long. How can you read 200 pages and be expected to handle everything on your own?

You need someone who can put it all together for you and that is where your independent financial planner comes in.

Find one at www.letsmakeaplan.org

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Filed Under: Business Notebook, Yardley Voice Columnists Tagged With: , , , ,

Why does financial planning seem so hard? Hint – there is a lot to it!

March 20, 2013 By

submitted by Michael Garry, CFP®, JD/MBA, Yardley Wealth Management, LLC

While investments have always been difficult for consumers to figure out, the ideas behind much of financial planning are still relatively new, and as the field grows it seems to get harder. There has been a surge in the available financial products, and much of the decision-making framework keeps changing.

The law with respect to taxes, retirement plans, and estate planning seems to stay in a perpetual state of flux, and the government just overhauled the U.S. Tax Code again, for about the millionth time. The financial planning marketplace is very different than it was just a few years ago.

In the past 15 years the following common investment vehicles either came into being or reached mainstream acceptance: Roth IRAs, Exchange-traded funds, 529 college savings plans, Coverdell Education Savings Accounts (Education IRAs), Series I bonds, Treasury Inflation-Indexed Securities (known more commonly as Treasury Inflation-Protected Securities, or TIPS), separately managed accounts (SMAs), hedge funds and online trading.

All of these offerings have greatly increased the options available for consumers, and freedom of choice is a great thing. Unfortunately, choosing wisely can be difficult, and sometimes having so many options makes it harder for people to figure out what to do.

We all have busy lives and don’t need to spend big chunks of it figuring out the latest consumer financial products! As a financial planning practitioner it is a constant challenge trying to keep my clients and myself properly informed; and educating the public is no picnic either.

Financial planning, for the most part, even with the wide-ranging choices, can still be a pretty simple process if you have someone who is highly qualified and independent helping you with it.

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Filed Under: Yardley Voice Columnists Tagged With: , , , ,

Keep your investments simple

February 19, 2013 By

submitted by Michael Garry, CFP®, JD/MBA, Yardley Wealth Management, LLC

How did the recent fall in Apple’s share price hurt some bondholders? In Jason Zweig’s article in the Wall Street Journal recently, he talked about investors getting hurt by the fall in Apple’s share price, and how it hurt some bondholders.

The headline grabbed my attention.

These so-called bondholders are people who bought “equity-linked structured products” from some of the big investment banks. The investors in these products got better yields than typical bondholders, with the premise that if the underlying stock price stays flat or goes up, investors get their money back at maturity.

Seemed like a safe bet with Apple, right?

However, they probably weren’t too aware that on the flip side if things went wrong and the company’s share prices went down 20% or more, the investor wound up getting shares in the company instead of getting their money back. So the investors bought a safe-sounding product for its higher yield and will now lose a lot of money.

Zweig asked rhetorically, how would you feel if your broker called to say you bought Apple at $700 when it is trading around $440 now?

A long time ago I read some great advice in Forbes Magazine. The editor at the time said to buy stocks or bonds, or funds of stocks or bonds, and that’s all. Anything more complicated than that was made by the intermediary to make money off its customers. I couldn’t agree more.

I go two steps further.

First, I don’t buy any individual stocks or bonds because it adds risk I don’t think is worth taking. Second, I buy funds that are passively managed, like index funds. I don’t think it is worth paying extra to try to beat the markets when so few people ever do.

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Filed Under: Business Notebook, Yardley Voice Columnists Tagged With: , , , , ,

Consumer Troubleshooter

November 30, 2011 By

submitted by Bucks County Consumer Protection Agency

Q. My son who is graduating from high school this year has asked for expensive electronics for Christmas. He is going off to college and it would come in handy for him. However, I really don’t have the money this year to go all out. I’ve been looking at all the sale flyers and noticed that some stores having a promotion that allows customer to make a purchase with no money down and no interest for two years. It seems like a great deal, but there must be a catch. What should I look out for?  L.H., Levittown

A. Consumers should be careful with this type of promotion. It is not always a great deal. Usually with the terms of the contract, you must pay in full before a certain date at the end of the two-year term. If there is any amount left, even a small amount by the end date the contract allows for all the interest for the full amount, build up over the two year term to be applied and must be paid under the agreement. If you choose to go with this promotion make sure you stick to the terms and you may want to pay the last installment well before the end date. It also would be a good idea to send it certified mail with a return receipt. This way they can’t say that you did not make the deadline. It may cost you a few extra dollars, but could save you hundreds. Consumers need to read the terms and agreement in it entirely before signing any contract or making any purchase. You will be held accountable to all terms in the agreement.

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Filed Under: Business Notebook Tagged With: , , , ,

No need to hang up the cape

November 30, 2011 By

submitted by Joseph J. Olenski, Social Security District Manager, Fairless Hills

Some of the strongest and most youthful superheroes to jump from the pages of comic books to the silver screen in recent years are old enough to be receiving full Social Security retirement benefits. Whether standing before the Bat-computer or going online at the Fortress of Solitude, these guys were certainly wise enough to apply for retirement benefits at www.socialsecurity.gov.

Superman may be America’s most popular superhero, and also the oldest to hit the screen in recent years. The Man of Steel was created in 1932. The guy is 79-years-old and he has a new movie coming out in 2012. Superman does mostly volunteer work, but even if he earns wages as Clark Kent, his benefits won’t be offset since he reached his full retirement age.

Batman made his debut in 1939, and he’s about to star in another feature film, running around like a 30-year-old. Also in his 70’s, Mr. Wayne is getting full retirement benefits – and Robin too. The same can’t be said for the Joker or Penguin; you can’t collect benefits while you’re in prison.

The Green Lantern and Captain America made their silver screen debuts this year. They were “born” in 1940 and 1941, and also are of retirement age. One would expect Captain America to look a little more like Uncle Sam these days, but as is true with many Social Security retirees today, staying active keeps him young.

For the “silver age” of comic book heroes, retirement isn’t quite here yet. Spider-Man slung his first web in 1962, the same year the incredible Hulk burst into being. Iron Man and the X-Men first appeared in 1963. They may not be ready to retire just yet, but it’s a good time for them to take a look at the online Retirement Estimator, where they can get an instant, personalized estimate of future retirement benefits. Come to think of it, if the Hulk or any of the X-Men ever get severely injured, they may qualify for disability benefits through Social Security. The place to go for more information is www.socialsecurity.gov.

Ask any of these superheroes about retirement plans, and you’re likely to get an earful. They won’t be sitting around – they’ll be staying active even as they collect retirement benefits. You don’t have to have a Bat-computer or be a superhero to harness the power of the Retirement Estimator at www.socialsecurity.gov/estimator, or to apply online for benefits at www.socialsecurity.gov.

Up, up, and away into an active retirement!

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Filed Under: Senior Scene Tagged With: , , , ,

Get personal with your bank

November 30, 2011 By

submitted by Joseph J. Tryon, Jr., President, Hatboro Federal Savings

If you weren’t among the millions of Americans who ditched their big banks last month during national “Bank Transfer Day,” you still might be mulling over the thought of moving your money somewhere else. Here’s what you should expect from a community bank.

Interest Rates.  According to Bankrate.com, community banks tend to offer better lending and savings rates than the bigger banks.

Family Focused. Megabanks generally cater to big business. Community banks focus on individuals and families in the communities they serve.

Customer Service. Since community banks are often smaller, with fewer customers, it’s only natural you’ll get more attention from people who actually know your name.

Lower Fees. We’ve all been reading lately about how the bigger banks have attempted to charge their customers fees to use their debit and ATM cards. Community banks in general have not been raising fees for debit and ATM card usage.

Free Checking. Most big banks have discontinued free checking accounts, and the ones that still have them are requiring much higher minimum balance requirements. Check the Web sites of community banks in your area and you still might find a few that actually offer totally free checking.

Free Nationwide ATMs. Many people are still hesitant to move their money from a big bank to a community bank citing fewer branches and ATMs. Yet, there are some ATM networks – Allpoint is one – that offer over 43,000 surcharge-free ATMs nationwide. If your bank is not part of an ATM network like Allpoint, you may pay a fee for transactions. So, find a community bank affiliated with Allpoint and you have no more excuses not to move your accounts elsewhere.

Better rates, free checking, no tacky fees and great customer service. Is this what you’re getting from your bank? If not, move your money to a community bank.

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Filed Under: Business Notebook, Southampton Spirit Columnists Tagged With: , , , ,

Buying NOW makes sense! Here’s why…

November 1, 2011 By

submitted by Lynne Kelleher, Prudential Fox & Roach, Realtors – Newtown Office

On the fence between waiting until the economy strengthens or buying a home now? The following facts may help you jump off and into your dream home:

  • You can buy more home today with the same payments.  A principal and interest payment of $1230 gets you a $250,000 mortgage at 4.25%. That same payment only gets you a $220,000 loan at 5.25% and a $200,000 loan at 6.25%;
  • Along that same vein, that $250,000 mortgage, which costs $1230 at 4.25%, costs $1381 or $1800 more per year at 5.25% and $1539 or $3708 more per year at 6.25%.

If you’re a move-up buyer, you may be thinking that it makes sense to wait until the economy recovers so your current home may be worth more.
WRONG! If your current home is worth $200,000 now and appreciates 2% in five years, it will be worth $220,731. If your move-up home is worth $350,000 now and appreciates at the same rate, it will be worth $386,427. Waiting five years could cost you $15,696 in additional costs, without factoring in the impact of what would surely be a higher interest rate.

Well, what if prices continue to fall, you say? No one can predict the future, and the only way you know when the market has bottomed out is when it’s on its way back. The big difference is that by then, everyone has figured out that the market – and interest rates – has begun to rebound.
Then the dynamics start to shift from a buyers market and the advantage is lost.  The bottom line? Get off the fence!

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Filed Under: Northampton Herald Columnists Tagged With: , , , ,

Nickel and dime bank fees

November 1, 2011 By

submitted by Joseph J. Tryon, Jr., President, Hatboro Federal Savings

Many banks in this area are inventing brand new fees to stick you with…and raising the ones they dreamed up years ago. Fortunately, there are ways to avoid these new gotchas.

Debit card fees – Starting in January 2012, many banks will begin charging their customers a monthly debit card fee for purchases. 

ATM fees – If you use an out-of-network ATM machine, be prepared to pay a fee. This may be unavoidable if your bank’s ATM network is limited to a small geographical location, like just in Bucks and Montgomery Counties.

Checking account fees – Two years ago, 75% of all banks offered free checking. Now, fewer than half do. And the fees keep mounting. Today, 60% more bank accounts carry fees and balance requirements than a year ago.

So, what can you do? Well, if you’ve had enough of your bank siphoning your money with new and higher monthly fees, consider dumping them and look to a smaller community bank for relief. Many community banks do not charge fees for using debit cards. And you can find out which ones simply by going to their Web site and poking around.

[Read more...]

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Filed Under: Business Notebook, Southampton Spirit Columnists Tagged With: , , , , ,

Buying NOW makes sense! Here’s why…

November 1, 2011 By

submitted by Kathleen Layton, Prudential Fox & Roach, Realtors – Newtown Office

On the fence between waiting until the economy strengthens or buying a home now? The following facts may help you jump off and into your dream home:

  • You can buy more home today with the same payments.  A principal and interest payment of $1230 gets you a $250,000 mortgage at 4.25%. That same payment only gets you a $220,000 loan at 5.25% and a $200,000 loan at 6.25%;
  • Along that same vein, that $250,000 mortgage, which costs $1230 at 4.25%, costs $1381 or $1800 more per year at 5.25% and $1539 or $3708 more per year at 6.25%.

If you’re a move-up buyer, you may be thinking that it makes sense to wait until the economy recovers so your current home may be worth more.
WRONG! If your current home is worth $200,000 now and appreciates 2% in five years, it will be worth $220,731. If your move-up home is worth $350,000 now and appreciates at the same rate, it will be worth $386,427. Waiting five years could cost you $15,696 in additional costs, without factoring in the impact of what would surely be a higher interest rate.

Well, what if prices continue to fall, you say? No one can predict the future, and the only way you know when the market has bottomed out is when it’s on its way back. The big difference is that by then, everyone has figured out that the market – and interest rates – has begun to rebound.
Then the dynamics start to shift from a buyers market and the advantage is lost.  The bottom line? Get off the fence!

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Filed Under: Business Notebook, Newtown Gazette Columnists Tagged With: , , , ,
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