Category Archives: Financial Planning

What is the best way to plan for your assets to remain within your bloodlines?

A 60-second read by Nicholas Scheibner:  When planning your estate, it is important to divide all of your accounts into two groups:  accounts with designated beneficiaries and accounts with no designated beneficiaries.  Examples of accounts with designated beneficiaries are 401(k)s, IRAs, transfer of death (TOD) accounts, and other retirement accounts. The designated beneficiary on an account bypasses your will.  For example, if your will states that all of your money is to pass on to your child, but your 401(k) primary beneficiary is an ex-spouse, your ex-spouse will inherit the money from your 401(k).  It is crucial that you review your beneficiaries on your accounts to make sure they agree with your desires.

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Class of 2017: It Isn’t Too Early to Start Thinking about Your Retirement

A 60-second read by the Baron Team:  Congratulations 2017 college graduates! Throw that mortarboard as high in the air as you can and before it circles back down to earth, start thinking about saving for your retirement. You are most likely going to be responsible for setting yourself up for a successful retirement, so your best bet is to invest early and often.

Invest in yourself first. Most people think investing is the key to wealth, but while certainly important, you have to have some money first to invest. So as soon as you begin your first job out of school, start saving as much as you can for retirement.

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The Pros and Cons of VA Loans

A 30-second read by Nicholas Scheibner: The federal government has provided qualified veteran home buyers with a few mortgage-buying options to help purchase a home.  Below are some of the Pros and Cons for Veterans Affairs (VA) loans.

An important note VA loans are for primary residences only.

To determine if you are eligible for a VA loan, visit http://www.benefits.va.gov/HOMELOANS/purchaseco_eligibility.asp

The first step in getting a VA loan is to obtain a certificate of eligibility from the VA: http://www.benefits.va.gov/homeloans/purchaseco_certificate.asp

Pros:

  • 0% down payment, if desired
  • No Monthly Mortgage Insurance
  • Can generally qualify for a larger mortgage than a Federal Housing Administration (FHA) loan

Cons:

  • The only person that can co-sign is a spouse
  • An additional fee is rolled into the loan. Depending on the situation, first time use of a VA loan could be anywhere from 1.5% – 2.4%.  The next home mortgage could be anywhere from 1.25% – 3.3%.

Baron Financial Group consults with independent mortgage professionals in order to explore options available to clients.  If you are thinking of purchasing a new home, refinancing a mortgage, or consolidating a HELOC (Home Equity Line of Credit), lean on us to help you through the process. Please contact your Baron Team if you have any questions.

What documents are safe to shred? What must I keep?

A 30-second read by Victor Cannillo: Whether you are tired of piles of papers cluttering up your home or are trying to go “paperless,” it is important to know what documents you should keep and which you could shred.

Below we list some of the important documents the Federal Trade Commission (FTC) suggests that you should always keep:

  • Birth certificates/ adoption documents
  • Social Security cards
  • Marriage licenses or divorce decrees
  • Tax returns
  • Passports or citizenship materials
  • Familial death certificates
  • For items like your home and car, you want to hold on to any automobile titles and home deeds for as long as they are in your ownership.
  • To see more, click here.

Shredding Timeline-The FTC recommends that you wait:

  • 7 years before shredding any tax-related receipts and cancelled checks.
  • 1 year before shredding bank statements, medical bills, etc.

Items such as credit card statements can be shredded right away once paid. To help reduce capital gains tax, retain home improvement receipts until your home is sold.

To view the FTC’s safe shredding timeline infographic, click here.

In addition to decluttering your home, shredding documents with personal information can help prevent identity theft.  Just remember to keep the listed documents above for the suggested amount of time.

Feel free to reach out to us for any other questions.

The Pros and Cons of FHA Loans

A 30-second read by Nicholas Scheibner: The federal government has provided home buyers with a few mortgage-buying options to help purchase a home.  Below are some of the Pros and Cons for Federal Housing Administration (FHA) loans.

An important note:  FHA loans are for Primary Residences only.

Pros:

  • Flexible qualification criteria-Minimum down payment is 3.5%. Keep in mind that the less money you put down on a mortgage, the higher the monthly payments will be.
  • Anyone can cosign, if needed, including a friend or parent. However, from a practical perspective, usually the co-signor is a family member.  If a friend co-signs for you, you need to put at least 25% down.  Note: If you are purchasing a multi-family house, even if a family member co-signs, you still need to put at least 25% down. 

Cons:

  • Monthly Mortgage Insurance never goes away for low-down-payment mortgages. If the borrower puts at least 10% down, the mortgage insurance will remain for 11 years. If they put less than 10% down, it will remain for the life of the loan. 
  • An additional fee of 1.75% is required. This can also be paid at closing or rolled into the loan.

Baron Financial Group consults with independent mortgage professionals in order to explore options available to clients.  If you are thinking of purchasing a new home, refinancing a mortgage, or consolidating a HELOC (Home Equity Line of Credit), lean on us to help you through the process. Please contact your Baron Team if you have any questions.

5 Financial Actions to Consider at Year-End

A 90-second read by Anthony Benante:  What 5 things should you be thinking about at the end of the year when it comes to your finances?

1. Review your personal budget and commit to a savings plan for 2017

a. On January 1, write down the balance in your checking account. Do this on the first of the month for the next three months. After you incorporate your income for the period, as well as take note of any cash withdrawals from other accounts, you can get a general sense of what your monthly spending is.

b. We work directly with our clients at Baron to help understand how their budget and all of their financial assets work together.  If you would like a budget sheet (either electronic or hard-copy), let us know. 

2. Review your long-term investment strategy

a. Is the long-term strategy in place for you still right for your specific circumstance? Are you going to be making any large purchases coming up in the New Year? Are you thinking about revisiting your risk tolerance – becoming more aggressive or conservative?

b. At Baron, we use a customized approach to design client portfolios.  We not only consider potential return, but also risk, as well as how the investments complement each other.  Having a long-term investment strategy is critical for investing success and provides a guide for when markets act unexpectedly or make a major directional move.

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10 Long-Term Care Terms You Should Know

A 60-second read by Nicholas Scheibner: As people are living longer, paying for health care costs is becoming a top concern.  Many people are beginning to consider if a Long-Term Care Insurance policy is best for them. 

Before you look at purchasing a policy, here are ten terms that you should know:

  1. Elimination Period: Most Long-Term Care policies require you to “pay your own way” for a specified number of days (generally ranging between zero and 120 days) before an insurance company will begin to pay benefits.
  2. Waiver of Premium – When you begin receiving coverage, the premium will be waived. For a shared policy, if one person goes on claim (begins receiving coverage), the premium would be waived only for that person.
  3. Joint Waiver of Premium – If one person goes on claim, all premiums stop.
  4. Survivor Waiver of Premium – If one passes away, the survivor’s premium would be waived.
  5. Flex Credit – If the company does well on their investments, they may pay down your premium or you can save the extra for waiver of premium.
  6. Activities of Daily Living – Assistance with 2 of the 6 activities of Daily Living is required for most Long-Term Care policies to become active: Dressing, Eating, Transferring, Toileting, Bathing, Continence.
  7. Inflation Protection: Since costs inevitably increase each year due to inflation, most policies will offer a provision that will allow your daily benefits to increase annually by a certain percentage.
  8. Portability: The policies should be portable between states. Some will cover worldwide.
  9. Home Care: Does the policy offer home-care coverage? Some companies offer it as a rider to the policy for an additional premium.
  10. Pooled/Shared Policy: This is a policy that can be used between couples.  The benefit can apply to either one or both spouses.

Please lean on us when considering a long-term care policy.  We can help you go through the pros and cons of the decision.  We can also help you determine how much you can afford in yearly premiums.

College and Financial Aid When Parents are Divorced

A 30-second read by the Baron Team: For students with divorced parents who live separately, the FAFSA (Free Application for Federal Student Aid) asks that you fill out financial information in regards to the custodial parent. For FAFSA, the custodial parent is the parent who the child has lived with the most over the last twelve months.

Provided that the ex-spouse is the non-custodial parent:

  • Many private colleges assume that the non-custodial parent could be a possible source of funding, and therefore require that they fill out a supplemental financial aid document.
  • In that case, any financial support the non-custodial parent may give would only affect financial aid provided by the school, not the student’s federal and/or state aid benefits.

For more information, you can go to FinAid.org and StudentAid.gov

If you have any questions, don’t hesitate to contact the Baron Financial Group team.

Where is the Best Place to Put My Emergency Funds? How Much is Enough?

A 60-second read by Anthony Benante:  You want to put your emergency funds in an account where the funds are easily accessible and not exposed to risk.  Examples include traditional bank accounts that carry FDIC insurance (savings, checking, etc.).  The current FDIC insurance limit is $250,000 (as of October 2016), so you should structure your accounts appropriately to ensure your emergency funds are protected.  You don’t want your emergency funds exposed to volatility, because it is possible you may need access to the funds when markets are experiencing volatility. If you put emergency funds in a risk asset (an investment that can change in value, such as a stock), it could wind-up causing you two financial problems, as opposed to having one financial solution.

How much you put in your emergency fund really depends on your specific situation, the stability of your job, your monthly budget and the consideration of all financial resources available. Typically, you want to put 6 to12 months of your salary away. If you are in a risky job or the majority of your income is from commissions or bonuses, the emergency fund may need to be more. Please contact us at Baron if you would like help in determining an appropriate amount for an emergency fund that would be best for your specific circumstance.

Medicare & Retirement Planning Webinar

Baron Financial Group’s Investment Committee provides an educational webinar on financial planning and investment management.  Medicare Consultant and guest presenter Mary Jean Cullen (MedicareAssist, LLC) discusses how Medicare works.  It is important to keep in mind that annual enrollment is open now through December 7th.

This presentation was first held at the September 13, 2016 Wine & Wealth event for our clients.

The webinar includes the following topics:

  • Beware of Market Doomsayers (0:00 -7:28) – Victor Cannillo
  • Asset Allocation and Diversification (7:30-15:53)   – Anthony Benante
  • Customized Financial Planning  (15:56-19:12) –  Nicholas Scheibner
  • What Role Does Life Expectancy Play in Retirement Planning? (19:13-23:15) – James Shagawat
  • Choosing A Medicare Plan: Learn What You Need To Know Prior and During Your Medicare Years    (23:30-51:44)  – Mary Jeanne Cullen

If you have any further questions, don’t hesitate to contact the Baron Financial Group team.