Spring Cleaning Your Debt

It's springtime--time for you to take stock of your surroundings and get rid of the dirt and clutter that you've accumulated during this past year.

In addition to typical spring cleaning tasks, you may want to take this time to focus on your finances. In particular, now may be as good a time as ever to evaluate your debt situation and try to reduce and/or eliminate any debt obligations you may have. The following are some tips to get you started.

Determine Whether It Makes Sense To Refinance

If you currently have consumer loans, such as a mortgage or an auto loan, take a look at your interest rates. If you find that you are paying higher-than-average interest rates, you may want to consider refinancing. Refinancing to a lower interest rate can result in lower monthly payments on a loan and potentially less interest paid over the loan's term.

Keep in mind that refinancing often involves its own costs (e.g., points and closing costs for mortgage loans), and you should factor them into your calculations of how much refinancing might save you.

Consider Loan Consolidation

Loan consolidation involves rolling small individual loans into one larger loan, allowing you to make only one monthly payment instead of many.

Consolidating your loans into one single loan has several advantages, including making it easier to focus on paying down your debt. In addition, you may be able to get a lower interest rate or extend the loan term on a consolidated loan. Keep in mind, however, that if you do extend the repayment term on a consolidated loan, it could take you longer to get out of debt and ultimately you may end up paying more in interest charges over the life of the loan.

Look Into Taking Out A Home Equity Loan

If you own a home and have enough equity, you may be able to use a home equity loan to pay off your debt. The interest on home equity loans is often lower compared to other types of loans (e.g., credit cards) and is usually tax
deductible.

Home equity loans can be an effective way to pay off debt. However, there are some disadvantages to consider. If you end up having an available line of credit with a home equity loan, you'll need to be careful not to incur any new debt. In addition, when you take out a home equity loan, your home is potentially at risk since it serves as collateral for the loan.

Evaluate Whether You Should Invest Your Money Or Pay Off Your Debt

Another effective way to reduce your debt load is to take cash that you normally would put toward certain investment vehicles and use it to pay down your debt. In order to determine whether this is a good option, you'll have to compare the current and anticipated rate of return on your investments with interest you would pay on your debt. In general, if you would earn less on your investments than you would pay in interest on your debts, using your extra cash to pay off your debt may be the smarter choice.

For example, assume that you have $1,000 in a savings account that earns an annual rate of return of 3%. Meanwhile, you have a credit card balance of $1,000 that incurs annual interest at a rate of 19%. Over the course of a year, your savings account earns $30 interest while your credit card costs you $190 in interest. In this case, it might be best to use your extra cash to pay down your high-interest credit card debt.

Come Up With A Payment Strategy To Eliminate Credit Card Debt

If you have a significant amount of credit card debt, you'll need to come up with a payment strategy in order to help eliminate it. Some options include:

• Making lump-sum payments using available funds such as an inheritance or employment bonus
• Prioritizing repayments toward cards with the highest interest rates 
• Utilizing balance transfers

Whenever Possible, Make Additional Payments

Making payments in addition to your regular loan payments or the minimum payment due can reduce the length of the loan and the total interest paid over the life of a loan. Additional payments can be made periodically and at a time of your choosing (e.g., monthly, quarterly, or annually).

Making more than the required minimum payment is especially important when it comes to credit card debt. If you only make the minimum payment on a credit card, you'll continue to carry the bulk of your balance forward for many years without actually reducing your overall balance.

Questions? Contact Abel Financial Strategies.

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A Certified Financial Planner ® in good standing that believes whole-heartedly in the Standards of the CFP ® program.

Securities offered through First Heartland Capital®, Inc. Member FINRA/SIPC   Advisory Services offered through First Heartland Consultants®, Inc.   (Abel Financial Strategies is not affiliated with First Heartland Capital®, Inc.)

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes) and Barron's (S&P 2014 total return); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprices.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment. Securities offered through First Heartland Capital® , Inc. Member FINRA/SIP

Initial Public Offerings (IPOs) - the basics

All About IPOs 

Maybe you've heard someone talking about investing in "a hot new IPO" and wondered what all the fuss was about. Or maybe you've heard about a company "going public" and thought about whether you should invest in it. If you're unfamiliar with initial public offerings (IPOs), here's a review of some basics.

What is an IPO?

 

As the name implies, an initial public offering represents the first time a company issues shares of stock that are available for purchase by the public (in other words, when it "goes public"). The sale of the company's stock is typically intended to attract new capital that the company can use to expand. IPOs might be considered the rock stars of the investing world; when the company has generated a lot of interest leading up to its IPO, the initial response from investors can make headlines.

How does an IPO work? 

Once the decision is made to go public, a company hires an investment bank to coordinate underwriting issuance of the IPO shares. The underwriter (or team of underwriters) guarantees it will purchase all of the company's shares on the day the stock is issued. However, underwriters typically do not intend to keep all of those shares, so they market them to other firms and financial institutions in advance of the actual IPO date. Firms that want to subscribe to the IPO indicate their interest in buying a certain number of shares (though they're not bound to follow through on that purchase). This process gives the underwriting firm(s) an idea of how much interest the IPO will generate. If there's a lot of interest and a large number of subscribers, the offering price can rise before the IPO date; if interest is low, the offering price will likely reflect that as well. However, the offering price may be very different from the price at which the stock trades on its first day. That's because once the subscribing firms have begun trading shares they've bought, the price can change dramatically, depending on the overall level of market interest. At that point, as with any stock, shares are sold to the highest bidder. The more limited the supply of shares available, the higher those bids are likely to be. That's why you may sometimes read headlines about the price of an IPO jumping on its first day.

What happens after the IPO? 

Even if an IPO is eagerly awaited, there's no way to know exactly what will happen once the stock starts trading. Yes, an IPO's price can skyrocket, but it can also go nowhere or disappoint--or skyrocket and then disappoint. Facebook's May 18, 2012, IPO was one of the most highly anticipated IPOs in recent years. And yet on its first day of trading, after an initial pop it closed up only 23 cents--roughly .006%--from its offer price; at the close of trading three weeks later, it was down roughly 30% from its offer price (though it subsequently rebounded and as of October 2014 had roughly doubled from the first-day close).* What's behind such volatility? One reason is that after any initial jump in price, the institutional firms that have subscribed to the IPO may want to take any profits quickly. Also, executives at companies that go public often have signed what's called a "lock-up" agreement; for a certain time after the IPO, they're prohibited from selling shares that may have been granted as part of their compensation package. Such agreements are designed to help support the stock's price during the lock-up period, which lasts at least 90 days but can be longer. However, once the lock-up expires, executives are free to trade their stock. If many of them sell simultaneously, the sudden increase in the supply of shares on the market may cause the stock's price to fall.

What if I want to invest in an IPO? 

One challenge with trying to invest in an IPO is simply gaining access to the shares. In the case of a stock that's in high demand, firms typically reserve IPO shares for their largest or most valued clients. For example, a firm might offer its IPO shares only to investors who have a certain level of assets with the firm or a minimum trading volume. If you're a small investor and are being offered IPO shares, it could be because the demand for them is less than expected, which could have implications for your investment in them. Even though past performance is no guarantee of future results, an IPO can be especially difficult to analyze for its long-term potential because it doesn't even have a track record to review. One tool is what's known as a "red herring." This is an initial prospectus that contains pertinent information about the company; it's issued after the Securities and Exchange Commission declares the registration statement effective. However, be aware that though the red herring is subject to SEC reporting regulations, it's part of a sales campaign by the underwriters to try to drum up interest in the IPO. Don't be tempted to invest in an IPO just because it's an IPO; think about whether it fits into your overall investment strategy and tolerance for risk.

*All investing involves risk, including the possible loss of principal, and there can be no guarantee that any investing strategy will be successful.

*Data source: Yahoo! Finance historical prices for Facebook, Inc. (FB) on May 18, 2012; June 8, 2012; and October 7, 2014.

At Abel Financial Strategies, we take a holistic approach in our client relationships and financial plans. As such, we offer comprehensive financial, retirement and estate planning, and professional fee-based investment advisory services.

Be Sure to Follow all of our social media channels and subscribe to our blog!

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Your complete source for personal financial planning.

A Certified Financial Planner ® in good standing that believes whole-heartedly in the Standards of the CFP ® program.

Augustus Abel does not provide legal or tax advice.  These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.

Securities offered through First Heartland Capital®, Inc. Member FINRA/SIPC   Advisory Services offered through First Heartland Consultants®, Inc.   (Abel Financial Strategies is not affiliated with First Heartland Capital®, Inc.)

Tax Time is here - Key Tax Numbers to help you file in 2015

April 15th is rapidly approaching and for many individuals and businesses, it's time to start preparing your 2014 tax returns.  At Abel Financial Strategies we can advise you on several ways to help lower your tax liability or maximize your return.  We offer tax planning on options to include:

• 401(k)
• 403(b)
• 457 Plans
• Simple IRA and 401(k)
• Simplified Employee Pension (SEP)
• Roth 401(k)
• other tools

Give us a call and we can discuss the various options available to you for lowering you overall tax liability!

Key Tax Numbers for 2015

In order to help you prepare your taxes, Abel Financial Strategies has put together some Tax Reference Numbers at a glance for you.

We take a holistic approach in our client relationships and financial plans. As such, we offer comprehensive financial, retirement and estate planning, and professional fee-based investment advisory services.

Be Sure to Follow all of our social media channels and subscribe to our blog!

Facebook

Twitter

LinkedIn

YouTube

View our website!

Your complete source for personal financial planning.

A Certified Financial Planner ® in good standing that believes whole-heartedly in the Standards of the CFP ® program.

Augustus Abel does not provide legal or tax advice.  These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.

Securities offered through First Heartland Capital®, Inc. Member FINRA/SIPC   Advisory Services offered through First Heartland Consultants®, Inc.   (Abel Financial Strategies is not affiliated with First Heartland Capital®, Inc.)

Saving or Investing: Is There a Difference?

Financially speaking, the terms "saving" and "investing" are often used interchangeably. But the concepts behind these terms actually have some important differences. Understanding these differences and taking advantage of them may help you in working toward financial goals for you and your family.

Saving

You may want to set aside money for a specific, identifiable expense. You park this money someplace relatively safe and liquid so you can get the amount you want when you need it. According to the Securities and Exchange Commission brochure Saving and Investing, "savings are usually put into the safest places, or products, that allow you access to your money at any time. Savings products include savings accounts, checking accounts, and certificates of deposit." Some deposits may be insured (up to $250,000 per depositor, per insured institution) by the Federal Deposit Insurance Corporation or the National Credit Union Administration. Savings instruments generally earn interest. However, the likely trade off for liquidity and security is typically lower returns.

Investing

While a return of your money may be an important objective, your goal might be to realize a return on your money. Using your money to buy assets with the hope of receiving a profit or gain is generally referred to as investing. Think of investing as putting your money to work for you--in return for a potentially higher return, you accept a greater degree of risk. With investing, you don't know whether or when you'll realize a gain. The money you invest usually is not federally insured. You could lose the amount you've invested (e.g., your principal), but you also have the opportunity to earn more money, especially compared to typical savings vehicles. The investment is often held for a longer period of time to allow for growth. It is important to note, though, that all investing involves risk, including the loss of principal, and there is no assurance that any investing strategy will be successful.

What's the difference?

Whether you prefer to use the word "saving" or "investing" isn't as important as understanding how the underlying concepts fit into your financial strategy. When it comes to targeting short-term financial goals (e.g., making a major purchase in the next three years), you may opt to save. For example, you might set money aside (i.e., save) to create and maintain an emergency fund to pay regular monthly expenses in the event that you lose your job or become disabled, or for short-term objectives like buying a car or paying for a family vacation.  You might consider putting this money in a vehicle that's stable and liquid. Think of what would happen if you were to rely on investments that suddenly lost value shortly before you needed the funds for your purchase or expense.

Saving generally may not be the answer for longer-term goals. One of the primary reasons is inflation --while your principal may be stable, it might be losing purchasing power. Instead, you may opt to purchase investments to try to accumulate enough to pay for large future expenses such as your child's college or your retirement. Generally, saving and investing work hand in hand. For instance, you may save for retirement by investing within an employer retirement account.

Why is it important?

Both saving and investing have a role in your overall financial strategy. The key is to balance your saving and investing with your short- and long-term goals and objectives. Overemphasize saving and you might not achieve the return you need to pursue your long-term goals.  Ignore saving and you increase the risk of not being able to meet your short-term objectives and expenses. Get it right and you increase your chances of staying on plan.

Be Sure to Follow all of our social media channels and subscribe to our blog!

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Your complete source for personal financial planning.

A Certified Financial Planner ® in good standing that believes whole-heartedly in the Standards of the CFP ® program.

Securities offered through First Heartland Capital®, Inc. Member FINRA/SIPC   Advisory Services offered through First Heartland Consultants®, Inc.   (Abel Financial Strategies is not affiliated with First Heartland Capital®, Inc.)

Abel Financial Strategies - working towards your goals and dreams

At Abel Financial Strategies, our focus is on you and your financial needs.  I spend time listening to your goals and dreams and then offer you options to help you work towards reaching them.  After a thorough examination of your position in relation to your goals, I will be able to offer options for working toward closing any gaps that are identified. Those options will be selected from the various products that are available.

Investments

These products are typically associated with a financial plan, and we offer several options including:

• Brokerage Accounts
• Fee Based Managed Accounts
• Stocks – Listed and Unlisted
• Bonds – Government or Corporate
• Mutual Funds
• Exchange Traded Funds (ETF)
• Options
• Unit Investment Trusts
• Fixed, Equity, and Variable Deferred Annuities
• Immediate Annuities
• Real Estate Investment Trusts  

Retirement Plans

Planning for your retirement can be complicated.  My goal is to work with you to identify your retirement goals, survivor goals, estate transfer goals, and to help you with investment management.  Products that can be used to help with this include:

• Individual Retirement Accounts (IRA) – Traditional and Roth
• Simplified Employee Pension (SEP)
• Profit Sharing
• 401 (k)
• 403 (b)
• Single 401 (k)
• Roth 401(k) Plans 

Insurance

An area that I also can help you with is health care planning, both short and long term.  This can be overlooked with financial planning, and I have good experience working with clients to ensure they have peace of mind when it comes to protecting themselves and their families from short term or long term health issues.  Products that can be used to achieve this include:

• Life Insurance
• Medical Insurance
• Medicare Supplement Insurance
• Disability Income Replacement Insurance
• Long-Term Care Insurance

The reason for the success of our business is very simple – We place the highest value on our relationship with our clients and their trust in us. That combined with our experience and education are the reasons clients stay with us and refer their family and friends to us.

Our securities licenses are held by First Heartland Capital, Inc. an independent broker/dealer. Being totally independent, we are not obligated to any one company to recommend certain investment products over others.

Be Sure to Follow all of our social media channels and subscribe to our blog!

Facebook

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View our website!

Your complete source for personal financial planning.

A Certified Financial Planner ® in good standing that believes whole-heartedly in the Standards of the CFP ® program.

Securities offered through First Heartland Capital®, Inc. Member FINRA/SIPC   Advisory Services offered through First Heartland Consultants®, Inc.   (Abel Financial Strategies is not affiliated with First Heartland Capital®, Inc.)