Archive - June 26, 2012

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Why You Should Not Trust Financial Advisors
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Behavioral Finance 101
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RMDs Don’t Have To Be Taken In Cash

Why You Should Not Trust Financial Advisors


Last month I received a fax from one of my clients requesting that I liquidate his IRA so that the funds could be invested in a guaranteed annuity product. In the letter, the client stated he was aware that market-driven investments have greater potential for growth but the annuity would provide him a guaranteed return. He also stated that he didn’t want further discussion on the matter, that he understood the pros and cons of the annuity, and that he did not wish to be contacted further.  Upon receipt of his instructions, I immediately liquidated his investments and sent him
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Behavioral Finance 101

Behavioral finance sounds like a laborious upper level college course required for financial geeks, like myself. But, behavioral finance (at least my definition) is actually one of the top driving forces behind the successes or failures in our personal financial lives.

Investopedia’s definition of behavioral finance: a field of finance that proposes psychology-based theories to explain stock market anomalies.

My definition of behavioral finance: the behavior we exhibit which impacts our personal financial well-being.

Okay, this definition is not found in Webster’s dictionary.  There’s probably not a college level course in this area…..although, I feel there should be.

Our financial …

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RMDs Don’t Have To Be Taken In Cash

But…

It’s a little-known fact that distributions from an IRA  or a Qualified Retirement Plan can be taken in kind, rather than in cash.  You can in any circumstance take distribution from the account of stocks, bonds, or any investment that you own, just the same as if it were cash.

The downside to this is determining valuation for the distribution.  You could value the distribution on the day of the distribution by opening price, closing price, average price, or mean between the day’s high and low prices.  Where you really get into trouble is when the security that you …

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