Latest news with #TaylorKovar
Yahoo
16-07-2025
- Business
- Yahoo
The Money ‘Rules' That Sound Smart — Until You Look Closer
Financial rules are often just guidelines rather than strict standards, and they depend a lot on unique circumstances, including income, assets and financial goals. While you should never play too fast and loose with sound financial advice, there's often more gray area inside these rules than it seems at first glance. Check Out: Read Next: Finance experts explained which financial rules you can ignore, and when. There still may be a lot of wisdom tucked inside the rules, but there may also be room to break them … wisely. If you take a hard line that debt is always bad, you might miss out on some key financial opportunities, according to Taylor Kovar, CFP, founder and CEO at 11 Financial. 'Yes, toxic credit card debt and high-interest personal loans can wreck your finances, but not all debt is created equal,' he said. For example, a low-interest mortgage or business loan might actually be helping you build wealth. 'I've seen people delay growth opportunities because they were too focused on being 100% debt-free instead of strategically using leverage,' Kovar warned. Someone who has just gotten out of debt consolidation, on the other hand, might want to stick with a hard line 'debt is bad' strategy, at least for a good long time. Find Out: Another common rule is that you should pay off your mortgage as early as possible by making extra payments or making a larger mortgage payment each month so as not to accrue too much interest. Kovar said this rule is situational. If you've got a low fixed rate, paying extra toward your mortgage might not be the smartest use of your money, especially if you don't have solid savings or you're not maxing out retirement accounts. 'I'd rather see someone build a healthy financial cushion than tie up all their extra cash in a house they can't liquidate quickly,' he said. Kovar gave this one a hard 'nope.' Renting can give people flexibility, he pointed out, especially if they're not sure where they want to live long term or if the housing market is overpriced in their area. 'Owning a home comes with a lot of hidden costs — repairs, taxes, insurance — that people don't always factor in. Renting can be a smart move depending on the season of life.' Kovar has worked with a lot of families who aren't overspending, they're just under-earning or don't have a system that works. For them, budgeting isn't the answer to everything. 'Sometimes the stress isn't coming from the budget itself, it's from trying to manage everything manually without the right tools or support.' When the stock market makes wide swings, you often hear that you should wait for it to calm down before you invest money in it, but that's not always the best rule to follow, according to Robert R. Johnson, PhD, a chartered financial analyst and professor of finance in the Heider College of Business at Creighton University. There is always a reason not to invest in the stock market if you give yourself one, Johnson said, because stock market corrections and crashes are virtually impossible to predict. This is exacerbated by media fear mongering. 'The market prognosticators who gain the most traction are the ones who make the most outlandish predictions — either bullish or bearish. Many of these people are introduced as someone who predicted a previous market decline or rally. The fact is that many of these people also predicted crashes or rallies that didn't happen.' Johnson also finds that people are 'extremely risk averse and are overly cautious in their asset allocation' when it comes to investing and typically don't take enough risks. While you do have to balance your risk tolerance based on your age and your financial goals, he said, 'Counterintuitively, the biggest mistake many people make in investing is not taking enough risk.' He shared an adage often tossed around in finance circles, 'You can sleep well or eat well,' pointing out that, 'You will sleep well if you commit funds to low-risk investments like money market funds or Treasury bills, but your investments will not grow substantially and may even have trouble keeping pace with inflation. You will eat well by consistently investing in stocks.' While real estate is undeniably a good investment, Johnson said that using it primarily as a vehicle to wealth is 'overrated.' Once you factor into account routine maintenance, property taxes and other costs, 'residential real estate has not been a very efficient way to build wealth,' he said. Additionally, many people make the mistake of buying the most expensive house they can afford and become house poor. 'Overextending and buying a large home is a losing strategy. Their mortgage payments crowd out other investing activities.' Before you call him crazy, Johnson is not suggesting that anyone should not save for retirement, but that 'one should think about saving and investing money for retirement.' Saving alone won't get you to true financial security. 'Because of compounding, time is the greatest advantage of investing.' While you do want to develop the discipline to save early in life, you should jump on the investing train as early as you can, too. More From GOBankingRates 5 Types of Cars Retirees Should Stay Away From Buying This article originally appeared on The Money 'Rules' That Sound Smart — Until You Look Closer Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
25-06-2025
- Business
- Yahoo
CD Maturing in a Low-Rate Market? Here's a Plan From a Financial Planner
The most recent consumer price index (CPI) data showed that prices increased 0.1% in May, bringing the annual inflation rate to 2.4%. While economists and experts track this data to predict whether the Fed will cut rates, investors are debating how to proceed in this environment. One popular investment during 2022 and 2023, when the Fed was raising rates, was a certificate of deposit (CD) because they provided a better return on your money. A CNET article shared advice on what to do when you find yourself with a CD that's set to mature in a low-rate market. If the Fed starts cutting rates, then CDs will likely offer lower rates and may become less appealing. Read Next: Check Out: 'When a CD matures in a falling-rate market, it can be tough to know what to do next,' said Taylor Kovar, CFP, founder of 11 Financial. Kovar spoke with GOBankingRates to help you decide on the best approach of what to do with a maturing CD amid falling interest rates. Kovar stressed that your financial goals should drive your entire decision when it comes to determining what to do with a CD that will mature soon. 'If this money is part of your emergency fund or something you'll need soon, then keeping it accessible matters way more than squeezing out a little extra interest. However, if you're not planning to use it for a while, it's worth storing it somewhere that works better for you,' he said. Financial experts believe that every dollar needs a job, and your goals help you figure out what that job is. For example, if you plan to make an offer on a home in the near future, it's advisable to have access to your funds, as you may need to use them. However, if you're still building up your savings, you may want a simple investment strategy as you focus on advancing your career. Find Out: If you decide to have an auto-renew set for your CD or if you simply want to let the funds roll over into a new CD, it's essential to note that the rate won't remain the same. 'Locking in a new one at a lower rate doesn't feel great, but letting the money sit idle isn't ideal either,' Kovar said. Kovar recommended that you don't auto-renew without looking around first, since the environment has changed since you locked into the CD a few years ago. 'Some short-term CDs are still offering decent rates, and if you're not planning to touch the money anytime soon, that could work,' he said. On the contrary, if the new rate feels too low and you don't want your funds locked in, you'll want to explore better options. 'One option is to break up the amount and build a short CD ladder,' Kovar explained. 'You're able to keep some flexibility while still earning interest.' By setting up a CD ladder, you invest your funds in multiple CDs with different terms. Multiple CDs with varying dates of maturity will provide flexibility while allowing you to optimize the best interest rates. This option could help earn more without risking your funds in the stock market or other investments that have been volatile in 2025. Kovar noted that before making any changes, it's worth shopping around for better investment options, as online banks and credit unions typically offer more competitive rates than your current bank. Your best options for a better investment include a high-yield savings account, a money market account or even a short-term Treasury. You'll want to explore various options to ensure you find the best investment for your situation based on your financial goals. For example, a high-yield savings account could offer a higher APY while providing you with the ability to withdraw your funds at any time without a penalty. You may decide that it's time to start investing in index funds or real estate. Either way, it's crucial that you take the time to seek professional financial advice so that you make a well-informed decision. If you earned a decent return on your funds, you can withdraw the money and use it to cover a significant expense when the CD matures. You may find that your investment paid off, and it's time for the funds to be put to use in another way. You could use the money to pay off debt or to cover the costs of your upcoming wedding. Whatever you decide on, it's important to remember that you can always use this money as you see fit. More From GOBankingRates 4 Affordable Car Brands You Won't Regret Buying in 2025 This article originally appeared on CD Maturing in a Low-Rate Market? Here's a Plan From a Financial Planner Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
08-06-2025
- Business
- Yahoo
7 Things You'll Be Happy You Downsized in Retirement
Downsizing for retirement is a good way to simplify your life and trim expenses. Making some key changes, like moving into a smaller home, could reduce financial strain and improve your quality of life. It could also give you room to grow in new, unexpected ways. Read Next: Discover More: As you approach retirement, here are some things you'll be glad you downgraded. There's a reason retirement experts often suggest downsizing your home or living space in retirement. It's perhaps one of the most significant ways of lowering costs while simplifying your lifestyle. 'Downsizing to a smaller and newer living space can often translate to less cleaning and maintenance costs in retirement, which can optimize your cash flow in retirement and remove the stress of constantly having to upkeep your home,' said Steve Sexton, retirement planning expert and CEO of Sexton Advisory Group. Moving into a smaller or energy-efficient space can also cut down on your utility bill. If you were spending a lot of time or money on your outdoor space, downsizing can make things easier here as well. Before taking the plunge, there are a few things you should do first, though. 'Make sure you consider all potential factors,' Sexton said, 'like HOA fees, property tax, homeowners insurance, closing costs, real estate agent fees, interest rates, moving costs, etc., to make sure this makes financial sense for you.' Find Out: While you can work full-time until the day you retire, Taylor Kovar, certified financial planner (CFP) and CEO of 11 Financial, suggested cutting back on your work-related commitments and working part-time for a while instead. This is something you can even do after you've officially retired if you still want or need some structure or additional funds. Switching to semi-retirement or switching to part-time work can lead to a better work-life balance and more flexibility in your life. It also can cut down on any work-related stresses you might have had previously while giving you greater financial stability. If you have multiple investment accounts, retirement could be a good time to combine or streamline some of them. 'I've advised clients to simplify their investment portfolios, moving from a diverse array of complex investments to more straightforward, lower-risk options,' said John F. Pace, certified public accountant (CPA) and partner at Pace & Associates CPAs. Doing this can cut down on account management fees, which is another plus for those trying to cut costs. Plus, it shifts the focus from wealth accrual to wealth management which, depending on your situation, could be a good change. If you've been dealing with a relatively complex financial situation over the years, you might want to simplify it before retiring. 'Simplifying financial and legal affairs can greatly alleviate the stress and confusion that often accompanies retirement planning,' said Marty Burbank, an estate planning expert at OC Elder Law. This includes consolidating any financial accounts you have — in addition to your investment accounts. It also involves creating clear-cut estate plans and ensuring everything is current when it comes to your legal documents. 'This simplification allows for an easier transfer of assets when the time comes and ensures that [your] wishes are respected,' Burbank said. It also brings about peace of mind for both you and your loved ones. If you're like most people, you've probably accumulated a good deal of clutter over the years. This can include sentimental items as well as other things you no longer need or use. 'While you'll want to hold on to family heirlooms or things that have sentimental value,' Sexton said, 'decluttering your space and selling off items you don't need — sports/workout equipment, outdated electronics, furniture and clothes that no longer fit — can help you organize your space while making some extra cash on the side.' If you donate to charitable organizations, you might even qualify for certain tax deductions. 'In retirement, most people don't expect to commute or drive as much,' Sexton said. 'If you and your partner are both retired, consider downsizing to a one-car household and save money on gas, insurance, repairs and more.' Depending on your needs and where you live, you might even be able to get away with not having a personal vehicle at all. You'll want to check your options as far as public transportation and ridesharing services go. But if it makes sense to get rid of your car altogether, you can save money. As an added bonus, losing the car encourages a more active, community-engaged lifestyle, according to Pace. If getting rid of your car entirely isn't in the cards, consider switching to one with better gas mileage or lower annual costs. You could end up with lower insurance premiums, too, depending on the model. As a general rule, it's best to pay off any debts before retiring. Doing so will free up cash in your retirement budget, as well as give you peace of mind once you leave the workforce. 'The most important thing you can downsize prior to retirement is debt,' Sexton said. 'In fact, aim to eliminate it completely. Doing so will safeguard your financial freedom in retirement and remove the stress of paying interest in your golden years.' If you still have a few years left before retirement, get aggressive with paying off your debts. Tackle any high-interest debts — like credit cards — first to avoid draining your account on interest charges. If possible, pay off your remaining mortgage and any other debts as well. More From GOBankingRates 3 Luxury SUVs That Will Have Massive Price Drops in Summer 2025 6 Popular SUVs That Aren't Worth the Cost -- and 6 Affordable Alternatives Clever Ways To Save Money That Actually Work in 2025 This article originally appeared on 7 Things You'll Be Happy You Downsized in Retirement Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNET
30-05-2025
- Business
- CNET
Don't Pull Your Retirement Savings From the Stock Market Without Reading This First
Never let a momentary market dip derail your investment strategy. LordHenriVoton/Getty Images Stock market drops can be scary, especially when your retirement savings are affected. Following last month's market plummet, many investors are understandably nervous about keeping their nest egg in something as volatile as stocks. But does that mean you should move your money into lower-risk assets like certificates of deposit? Not so fast, experts say. "Stocks and CDs play very different roles in a well-diversified investment portfolio. Neither is inherently good or bad," said Keith Spencer, CFP, founder and financial planner at Spencer Financial Planning, LLC. "CDs can feel like a safe haven in this kind of environment because they offer predictability, which is appealing when everything else feels shaky," says Taylor Kovar, certified financial planner and CEO of 11 Financial. But, he warns, "There are some trade-offs." Here's what you need to know before you upend your investment strategy. Read more: The Simple $1 Trick Helped Me Pay Off Debt and Retire on My Terms. Here's How It Works If you have decades before retirement, stick to the plan Stock market swings are stressful but a smart investing strategy factors in the dips. The S&P 500 has historically delivered about a 10% annual return for investors who keep their money there for decades. If you have many years before retirement, you can afford to ride out the waves and grow your money over the long term. "One of the biggest retirement risks is getting too conservative too soon," said Noah Damsky, CFA, principal of Marina Wealth Advisors. "Retirement can last for over 20 years, so get too conservative too soon, and you risk prematurely depleting your portfolio." Keeping some of your retirement savings in low-risk assets is wise, but the amount depends on a number of factors, including your age and risk tolerance. A financial adviser or robo-advisor can help you create the best strategy for you. If retirement is near, low-risk assets like CDs make more sense If you're close to retirement -- or are already retired -- you have less time to recover from stock market dips. So, your priority should be less on growing your nest egg and more on preserving it. In this case, allocating more of your savings to low-risk, fixed-income assets like CDs and bonds can be a smart move. "For retirees, it would be recommended to allocate a higher percentage of your portfolio to lower-risk CDs," said Faron Daugs, CFP, founder and CEO at Harrison Wallace Financial Group. "Think of it as a second tier of stability in your portfolio. Once your liquid investments -- such as money market accounts -- run out or become low, use a laddered CD approach. This allows CDs to mature and refill those buckets." You can learn more about CD ladders here. Again, a financial adviser can help you determine your best route. Note that you can buy a brokered CD through your brokerage account rather than taking money out of the stock market and putting it into a bank CD. However, there are pros and cons to consider. Don't let emotion derail your retirement plan Whatever your age and investment goals, don't let the economic headlines scare you into making any drastic changes to your retirement strategy. "For investors rattled by the recent dip, I'd say this: Don't make emotional decisions in response to short-term volatility. Step back, review your timeline, and make sure your investments match your goals and risk tolerance today, not what they were five years ago," said Kovar. "A well-balanced plan usually includes both stocks and CDs, one for growth, the other for peace of mind."
CNET
27-05-2025
- Business
- CNET
Wait! Don't Move Your Retirement Fund From the Stock Market to a CD Before Reading This
Yes, CDs are safe. But that comes at the cost of higher earning potential. LordHenriVoton/Getty Images Last month's stock market drop was scary, especially if some of your retirement savings are in stocks. And while the market may have recovered, many investors are still shaken. If you're wondering whether you should pull your money out of your 401(k) or other retirement account and put it in a certificate of deposit, it's understandable. But before you make any drastic moves, consider what the experts have to say. "CDs can feel like a safe haven in this kind of environment because they offer predictability, which is appealing when everything else feels shaky," says Taylor Kovar, certified financial planner and CEO of 11 Financial. But, he warns, "there are some trade-offs." Here's what you need to know before you upend your investment strategy. Read more: The Simple $1 Trick Helped Me Pay Off Debt and Retire on My Terms. Here's How It Works If you have decades before retirement, stick to the plan Stock market swings are stressful, but a smart investing strategy factors in the dips. The S&P 500 has historically delivered around a 10% annual return for investors who keep their money there for decades. If you have many years before retirement, you can afford to ride out the waves and grow your money over the long term. "One of the biggest retirement risks is getting too conservative too soon," said Noah Damsky, CFA, principal of Marina Wealth Advisors. "Retirement can last for over 20 years, so get too conservative too soon, and you risk prematurely depleting your portfolio." Keeping some of your retirement savings in low-risk assets is wise, but the amount depends on a number of factors, including your age and risk tolerance. A financial adviser or robo-advisor can help you create the best strategy for you. If retirement is near, low-risk assets like CDs make more sense If you're close to retirement -- or are already retired -- you have less time to recover from stock market dips. So, your priority should be less on growing your nest egg and more on preserving it. In this case, allocating more of your savings to low-risk, fixed-income assets like CDs and bonds can be a smart move. Again, a financial adviser can help you determine your best route. Don't let emotion derail your retirement plan Whatever your age and investment goals, don't let the economic headlines scare you into making any drastic changes to your retirement strategy. "For investors rattled by the recent dip, I'd say this: Don't make emotional decisions in response to short-term volatility. Step back, review your timeline, and make sure your investments match your goals and risk tolerance today, not what they were five years ago," said Kovar. "A well-balanced plan usually includes both stocks and CDs, one for growth, the other for peace of mind."
