The Dog Days of Summer

Well, this market brings new meaning to the phrase “Dog Days of Summer.”  Despite the market, please be patient and stay the course with your investment allocation.  This is not the time to shift investment dollars to cash/emergency funds.

For all clients, I recommend you have an investment “bucket” and a ready cash/emergency reserve “bucket.”  For most people that are more than three years from retirement, their ready cash/emergency reserve equals about a year of living expenses.  For most people that are within a few years of retirement, and for those that are retired, the ready cash/emergency reserve should be closer to three years of living expense needs that are not met by Social Security, pensions, etc.  The large cash reserve for retirees and near-retirees allows you to withstand market turbulence.

Please avoid the urge to shift your investment dollars to your emergency reserve bucket.  People who sell out of the market at a low point will invariably re-enter the market at a much higher level.  It is a losing endeavor.  If this market is making you rethink your risk tolerance and asset allocation, please contact me so we can discuss your situation personally.

Parents of College-Bound Kids: Read Debt-Free U

I recently read Zac Bissonnette’s book Debt-Free U.  In his words, this book details “How I paid for an outstanding college education without loans, scholarships, or mooching off my parents.”  He is funny, irreverent at times, and spot-on in his advice.   The introduction summarizes the growing problem with the availability of student loans and focuses on the people you meet during the college application process – and the lies they tell you.

Did you know that student loan debt totals about $600 billion dollars (compared to credit card debt at $850 billion dollars)?  Thirty years ago, there wasn’t any student loan debt.  One third of all borrowers will end in default.  And unlike credit cards, student loan debt has no consumer protection, cannot be discharged in bankruptcy, and Social Security payments can be garnished to pay off delinquent student loan debt.  For the 90% of the public who don’t have the resources to easily pay for college, this is a must read!  I’ll highlight more from this book in future posts.

Strohschein Law – Free Wills in February

I recently caught up with Linda Strohschein, an estate planning/elder law attorney in St. Charles.  We were discussing the importance of Healthcare Powers of Attorney for young adults (especially college age and college-bound kids), and she mentioned two POA workshops they’ll be providing in the coming months (April and June 2011).  This is a great opportunity to become knowledgeable on this important planning document – please contact her law firm for details (www.strohscheinlaw.com).

She also mentioned their February Free Will promotion.  For those of you who don’t have a current will (and for those few clients of mine who don’t have a will at all!), if you schedule an appointment this month, the will is free.  This is a tremendous savings and a great incentive to update your estate plan.