Last Week’s Question of the Week: What year was the FDIC (Federal Deposit Insurance Corporation) created? ANSWER: The FDIC was created in 1933.
HOST: Please let our listeners know how they can get help from a firm like yours? Call to make an appointment? Is there any cost?
KLAAS FINANCIAL: Klaas Financial is 42 years old, operating as a hybrid firm. We have two offices focusing on retirement planning, utilizing both fee-based planning/fee for service for individuals.
Three divisions to help direct future retirement of individuals (KIP & KLAAS 360) and also assist companies with their 401k plans (KLAAS 401k).
First meeting is always complimentary; second opinion can’t hurt. Always good to make sure that you are on track for your goals.
Klaas works often as a coach for your retirement, which does separate us from other firms. We help direct your team (Accountant, Investment Services, Insurance Agent, Estate Planning Attorney, Banker)
HOST: I know that one thing I hear you talk a lot about is the idea of Simplifying, Consolidating and Diversifying?
KLAAS FINANCIAL: Yes, we seek to help our clients understand that this should be their mission when it comes to their entire financial picture.
There is a misconception that having multiple advisors about having multiple accounts is safer…while what is most important is to look at asset allocation and appropriate risk.
In a nutshell, asset allocation refers to the percentage that you keep in your portfolio of stocks, bonds and cash or cash equivalents.
There is age-based asset allocation, and asset allocation through the use of lifecycle funds.
Age-based asset allocation: As individuals approach retirement age, portfolios should generally move to a more conservative asset allocation so as to help protect assets that have already been accumulated; stocks, bonds and cash holdings need to adjust in accordance, generally speaking.
Lifestyle, or target-date fund allocation: are a grouping of mutual funds that attempt to provide investors with portfolio structures that address an investor’s age, risk tolerance and investment objectives with an appropriate apportionment of asset classes. While sometimes these can work as a standardized solution for allocating portfolio assets it does not take into account individual circumstances.
HOST: What other Investing Principles are important to remember?
KLAAS FINANCIAL: We just covered our first one, which is to diversify.
6 Simple Investing Principles:
- Diversify – “Don’t put all your eggs in 1 basket”. Diversification does not necessarily mean having multiple advisors – rather it means not owning just 1 stock or bond.
- Know your time frame – The amount of time you have to invest your money can and should have a major impact on your asset allocation (how much in stocks vs bonds vs alternatives vs cash).
- Know your risk profile – How much loss/volatility can you tolerate? Being more aggressive just because someone thinks you should be does you no good if you sell out of your investments when the market goes down. Remember that when we look at stock market history, it is normal to expect at correction of 15% or more every 2 years, 20% or more every 3.5 years.
HOST: What about trying to time the market?
KLAAS FINANCIAL:
- Stay committed to your strategy and do not try to time the market
- Time is your greatest advocate when it comes to investing – Get started now!
- Seek professional feedback or direct guidance – While not everyone must have a money manager who invests their money for them… it is important to at a minimum seek the advice of a professional.
HOST: What about interest rates? They seem to be going up? Is it not a good time to buy a house?
KLAAS FINANCIAL: While it is true that interest rates for home loans and refinances have gone up from the low threes to high fours or more, this should not make anyone nervous about buying a home or re-financing if you will save money over the long-term.
Remember though, don’t get in more debt than you can really afford. What you qualify for, doesn’t mean how much you should really spend.
Catch C.J. Klaas and Maleeah Cuevas on Money in Motion every Thursday on Madison's 1310 WIBA from 8:05-8:35am.
