Russell Bailyn's Financial Planning Blog

Recently I had a client call in to sell his position in a fertilizer stock in which he made a 20% profit. His reason for selling was that the stock showed signs of weakness and he thought the Federal Reserve speech might spook the market into a downtrend. Fair enough. A few hours later I had a different client call to buy the same stock, saying he saw signs of weakness and thought it might be a good time to buy the stock. Plus, he thought the Fed speech might be positive and give the markets a boost. Two smart guys with totally different opinions. The experience reinforced my belief that most investors don’t know a thing about the markets. Trying to guess the short-term direction of a stock is usually a losing proposition. I’ve been thinking for the last few hours about what strategy a moderately conservative investor could use to seek out some growth in their portfolio without taking on too much risk. The below strategies should help you mitigate risk and hopefully teach you a thing or two about the movement of stocks.

Continue reading "Simple Rules for Making Money with Stocks" »

Posted by Russell Bailyn at 05:09 PM | Permalink | Comments (0) | TrackBacks (0)

There was a spread in the Wall Street Journal at the end of 2007 in which a variety of seasoned financial experts were asked where the markets were headed in 2008. The predictions were mostly bullish - Dow 14,000 - Dow 15,000 - Dow 16,000 - true dreamers. A couple of people more accurately predicted flat markets in the face of staggering oil prices and a weak housing market. But nobody--none of the experts--expected a 10% decline in the first quarter alongside a massive credit crisis. I’ve listened to hundreds of bulls and bears make predictions about market direction over the past five years and I keep returning to the same conclusion: these people have no clue where the market is headed.

Continue reading "Are Market Predictions a Waste of Time?" »

Posted by Russell Bailyn at 12:57 PM | Permalink | Comments (0) | TrackBacks (0)

As we continue to question the softening economy, I’ve noticed lots of finger pointing in the media. Originally it was let’s blame Greenspan and the old Fed for keeping interest rates too low for too long. Now people are blaming Bernanke and the current Fed for not anticipating the credit crisis earlier and brainstorming a solution. Yet others blame the mortgage brokers and banks for not adequately disclosing the terms and risks inherent in certain loans which we now know to be junk. And of course, why not blame Bush? The president has driven up our federal deficit by paying for a war which is totally out of favor with the public. So who should really take the heat for the current economy? You should.

Continue reading "Market Turmoil: Taking Personal Responsibility" »

Posted by Russell Bailyn at 02:21 PM | Permalink | Comments (0) | TrackBacks (0)

There was an article in Boomer magazine this month about prospective retirees who may be thinking twice about their retirement plans in light of the recently sour economy. It sounds like a reasonable concern to me. If your investment portfolio is off 15% over the past three months and your home price is steadily declining, your confidence about retiring is probably lower today than it was last year. How can you handle this situation?

Continue reading "Reconsidering Retirement?" »

Posted by Russell Bailyn at 03:31 PM | Permalink | Comments (0) | TrackBacks (0)

We’re entering the heart of tax season so I figured now would be a good time to do this post. If you are a client and haven’t brought in your tax documents for 2007 yet, please get in touch with us sooner than later. For those who read my blog from other parts of the world besides New York, here are a few tips that may help you this tax season. Let’s start with the best part: free money the government may give you this year as an ‘I’m sorry’ for the recessionary pressures hanging over all of us. I’d like to thank the broader financial services sector for creating a $500 billion liability we all must grapple with.

Continue reading "The Economic Stimulus Package + Other Helpful Tax Strategies" »

Posted by Russell Bailyn at 03:27 PM | Permalink | Comments (0) | TrackBacks (0)

Becoming wealthy is not only about how good you are at earning money. It’s also about understanding and protecting your money. Below I’ve outlined a few concepts which plenty of people—plenty of very smart people—often overlook. Perhaps you can pick up an idea or two which improves your own personal financial life.

Continue reading "Five Smart Ideas for Your Money" »

Posted by Russell Bailyn at 10:38 AM | Permalink | Comments (1) | TrackBacks (0)

A common misconception is that all mortgage rates drop when the Fed cuts interest rates. The truth is that the exact opposite may be the case. When you hear that the “Fed cut rates today” the reference here is the Federal Funds Rate, the overnight lending rate that the Fed uses with other banks. The stock market often gets excited about the lowering of this rate because short-term borrowing becomes cheaper, generally increasing economic activity for businesses. However, homeowners with 15 and 30-year fixed mortgages shouldn’t be so sure that a lower federal funds rate will equal a refinancing opportunity.

Continue reading "Catch the Falling Mortgage Rate" »

Posted by Russell Bailyn at 04:11 PM | Permalink | Comments (0) | TrackBacks (0)

Not all corporate employees realize that Roth 401k deferrals have been allowed since January 1st of 2006. The Roth 401k, like a Roth IRA, allows accounts to grow tax-free and allows for tax-free withdrawal of contributions, earnings, and interest. Funds are eligible for withdrawal at age 59 1/2 assuming you’ve held the account for at least 5 years. The ‘drawback’ is that you can’t take a tax deduction at the time of deferral the way you can with a traditional 401k. Many financial advisors feel that Roth plans, if you qualify for them, are more valuable than traditional plans. Technically, it depends on a few different factors including your current tax bracket, your retirement tax bracket, and which direction marginal tax rates are headed for in the future.

Continue reading "Consider the Benefits of a Roth 401k" »

Posted by Russell Bailyn at 02:01 PM | Permalink | Comments (0) | TrackBacks (0)

The Real Deal posted a front page article earlier this month on the growing popularity of mortgage contingency clauses found within buyers’ purchase contracts. For those who aren’t familiar, this is a provision in the purchase contract in which the buyer is only obligated to the sale if he/she is able to get a mortgage. Put another way, the buyer doesn’t risk losing their deposit--often 10% or more--if factors affecting the credit markets force them out of a deal.

Continue reading "The Mortgage Contingency Clause" »

Posted by Russell Bailyn at 02:01 PM | Permalink | Comments (0) | TrackBacks (0)

I understand the value of a dollar extremely well. Each day I break the world around me down into dollars and cents. I try to assign a value to the meals I eat, the clothing I buy, and the services I pay for. If I can’t justify my purchase, I won’t make it based on principal. Because I’m in my mid 20’s, there are plenty of expenses which I haven’t covered yet. College tuition would be a good example. Clearly this is a good thing because shelling out for education expenses is hardly what I feel like doing right now. The big-ticket purchase which I’m curious about today is weddings. I’ve been to plenty and have a pretty good idea about what the financial breakdown looks like, but I still have to wonder, why does it need to be so expensive?

Continue reading "How to Pay for a Wedding" »

Posted by Russell Bailyn at 09:17 AM | Permalink | Comments (1) | TrackBacks (0)

I have a hunch that food inflation is about to take center stage. Some may have noticed the increase in chatter about farm subsidies and commodity prices already in the early rounds of presidential debate. This is likely to continue into 2008 because agriculture prices are currently in ‘spike’ mode. Take a look at the Deutsche Bank Liquid Commodity Index--up 18.6% since January 1st--as proof.* This index covers wheat, corn, soybeans, and sugar among other commodities. So what’s driving these prices higher? And what can you do to protect a portfolio against agflation (agriculture inflation)?

Continue reading "A Simple Breakdown of Agflation" »

Posted by Russell Bailyn at 05:15 PM | Permalink | Comments (1) | TrackBacks (0)

At times like this, old-fashioned advice such as ‘buy, hold, and don’t pay attention’ works extremely well. I’ve had several clients call over the past few weeks concerned about the day-to-day volatility in the stock and bond markets. I try to quickly remind everyone that asset allocation, diversification, and a solid financial plan are the ways to help achieve wealth--not cashing out a stock when it’s making money and trying to time getting back in after the price drops. That strategy, known as market timing, is a losing proposition over the long run and is better to avoid altogether. So what has the market in such a panic? I’ll give you a few different perspectives:

Continue reading "Is a Recession on the Horizon?" »

Posted by Russell Bailyn at 04:24 PM | Permalink | Comments (2) | TrackBacks (0)

There was a great article on Bankrate last week called “Surviving the Sandwich Years.” The reference here is to people typically in their 40’s and 50’s, grappling with paying for aging parents while saving for both kid’s educations and retirement. The article points out that only 20% of people can rely on an inheritance and proper planning should really disregard any potential windfalls. Here are the ‘survival tips’ pertaining to estate planning which are offered by the article along with some of my own commentary:

Continue reading "Surviving the ‘Sandwich Years’" »

Posted by Russell Bailyn at 05:09 PM | Permalink | Comments (1) | TrackBacks (0)

An interesting article in Worth magazine this month talks about how many of the country’s leading attorneys are helping their clients grapple with how to pass money along to their kids. The problem, of course, is making sure the wealth is treated as an opportunity and not as a tool to derail motivation and the desire to succeed. The lawyers in the article point out that in the 70’s and 80’s, a typical meeting between a client and his or her attorney or financial advisor would be comprised of strategies which ensure giving the IRS as little money as is legally possible during a wealth transfer. The goal was to maximize the amount of money being transferred to younger generations and minimize the tax implications. Nowadays, the shift is away from taxes and onto the effects of inherited wealth.

Continue reading "Wealthy Parents & Inheritances: Transmitting Values with Money" »

Posted by Russell Bailyn at 03:55 PM | Permalink | Comments (0) | TrackBacks (0)

Do you love what you do? When I pose this question to my clients about half say yes and the other half say no. From what I’ve read, the actual number of people who truly enjoy their day job is around 30%, indicating the other 70% are either miserable at work or just plain accepting it. To be fair, not everyone can do exactly what they love. Once you have a family and a mortgage, the ability to take risks with your career and “pursue your passions” can quickly dissipate. Also, once you reach a certain level of job security and income stability, change may take a backseat to sheer survival and maintenance of our current lifestyles. What I envision for an improved work-world would be more people getting fired up to take charge of their destiny and make positive changes in their life.

Continue reading "Do What You Love & You May Earn More Money" »

Posted by Russell Bailyn at 11:52 AM | Permalink | Comments (2) | TrackBacks (0)

There are at least a dozen financial personalities which are extremely well-known. Some aren’t so much “advisors” as they are motivational speakers, authors, consultants, etc. Even so, they are commonly found in public, and on CNBC shows such as “The Millionaire Inside,” talking about how they got rich and what other people can do to follow in their footsteps. I’ve been meaning to get this post up for a while, giving my overview of the most prominent financial advisors and their varying opinions. What we’ll ultimately find is that many of these people are giving different, often contradictory advice. Perhaps they are trying to carve out a niche for themselves or separate their identity from everybody else. Regardless, the bottom line is that each of these people has earned a living through self-promotion and entrepreneurship. Perhaps this is the most important lesson we should learn from.

Continue reading "Famous Financial Advisors: Who’s the Best?" »

Posted by Russell Bailyn at 11:40 AM | Permalink | Comments (6) | TrackBacks (0)

I came across a great blog while doing research for my book which I’d like to share with my audience. It’s www.pensionriskmatters.com, written and maintained by Susan Mangiero. Based on the title, you may have caught on to the blog’s theme--mainly pension plans and the host of factors which affect them. The topic spectrum is fairly broad, such that anyone from a pension manager, plan sponsor, attorney, financial advisor, or even individual investor can learn something.

Continue reading "A Blog Which I Enjoy" »

Posted by Russell Bailyn at 04:44 PM | Permalink | Comments (0) | TrackBacks (0)

After months of anticipation, Navigating the Financial Blogosphere: How to Benefit from Free Information on the Internet hits stores today. And now, my era of shameless self-promotion shall begin! You can find the book online at Amazon.com or in Barnes & Noble and Borders bookstores. Please do pick up a copy and explore this project which I’ve worked so hard on! Inside I will point you towards various informational outlets on the web which can help you tackle personal finance and better understand a variety of issues regarding money. The chapters, which are based on questions I received from actual readers, include:

Continue reading "My New Book -- Hits Stores Today" »

Posted by Russell Bailyn at 02:22 PM | Permalink | Comments (7) | TrackBacks (0)

I had a client come in last week to create a budget. As usual, I pulled out my template which attempts to capture all of one’s income and expenses for a given month. The budget worksheet we use at my firm is very detailed and includes all household expenses, funds which get earmarked for savings and investments, transportation costs, insurance premiums, etc. My most common experience when creating budgets has been that more money exists than one realizes. On paper, it seems near impossible that a shortfall could exist. It’s the casual discussion afterwards when the “oh yes, I’m addicted to downloading music” and “I needed those sunglasses” comments come out.

Continue reading "Who Really Follows a Budget?" »

Posted by Russell Bailyn at 09:56 AM | Permalink | Comments (2) | TrackBacks (0)

Last week my office huddled together in the conference room to discuss the looming correction in the Dow Jones Industrial Average. A market correction is sometimes defined as a drop of at least 10%, but not more than 20% over a short period of time. The major difference between a bear market and a correction is magnitude and duration. Bear markets last much longer, and the magnitude of loss is greater. Last week, during a wild day of trading, the Dow briefly hit a level which was 10% below the high of 14,015 which we reached on July 19th. Fortunately, the market has shown a bit of strength--partially aided by some emergency policy decisions of the Federal Reserve Bank--and moved up a few hundreds points since its lowest levels. So what should you know? And what should you do?

Continue reading "Market Jitters Bring Volatility & Uncertainty" »

Posted by Russell Bailyn at 03:51 PM | Permalink | Comments (1) | TrackBacks (0)

There was a great article in Bottom Line this month featuring MSN Money columnist M.P. Dunleavey about the actual correlation between increased wealth and increased happiness. As you might expect, the findings were not simply that you will be happier on a day-to-day basis if you have more money.

Continue reading "Can Money Really Buy Happiness?" »

Posted by Russell Bailyn at 10:07 AM | Permalink | Comments (2) | TrackBacks (0)

Would you consider it worthwhile for major brokerage firms to focus marketing dollars and valuable time on investors in their 20’s and 30’s? Perhaps more squarely phrased: Does this demographic have any money to invest? If you simply view the past behavior of major financial firms, you’ll find them targeting mostly those aged 50+ in terms of product construction, speaking engagements, and the direction of marketing dollars. An interesting example lies in the prime advertising spaces purchased by financial firms showcasing aging professionals relaxing by the beach after a seasoned advisor helps them quantify and realize their retirement dreams. The implication here is that retirement is a hot topic among aging professionals who seemingly have big bucks. Besides the fact that they are passing what we call “accumulation phase” and quickly entering the “distribution and gifting phase,” many are also the beneficiaries of inheritances left by those passing away in their 80’s. So, why are some financial firms shifting their focus over to a younger and less profitable generation?

Continue reading "Charles Schwab to Focus on Younger Investors" »

Posted by Russell Bailyn at 12:13 PM | Permalink | Comments (1) | TrackBacks (0)

WisdomTree Investments recently released earnings-based exchange-traded funds. This follows a pattern established by WisdomTree to market fundamentally-weighted ETFs which are unique and potentially valuable to a new generation of investors. Luciano Siracusano, director of research for WisdomTree, appeared on CNBC in late March to talk about the appeal of this unique product line. According to Siracusano, research has shown that creating indexes based on earnings and dividends can potentially increase dividend yields, lower P/E ratios, reduce overall volatility, and increase investment returns. Does this sound too good to be true? Visit the website or read up on Jeremy Siegel’s research which back-tests a multitude of corresponding data. You may also find this interview from Seeking Alpha with Siracusano interesting as well.

Continue reading "Update on WisdomTree Investments" »

Posted by Russell Bailyn at 12:31 PM | Permalink | Comments (0) | TrackBacks (0)

The 5th Annual Integrated Wealth Management Forum is coming up September 10th-12th at the Union League Club in New York City. For those unfamiliar with this unique event, it brings together great financial minds to discuss issues and ideas regarding wealth management. Included on the impressive roster of speakers this year will be Robert Arnott, the father of fundamental indexing, Daniel Kahneman, a Princeton professor and recognized expert on behavioral science, Jean Brunel, editor of the Journal of Wealth Management, and Charlotte Beyer, CEO of the Institute for Private Investors. The event should provide a great educational resource and networking opportunity for those who deal with high net-worth clients in their practices.

Continue reading "The 5th Annual Integrated Wealth Management Forum" »

Posted by Russell Bailyn at 10:12 AM | Permalink | Comments (0) | TrackBacks (0)

The following is an exact transcript from my interview with Jeffrey Feldman, the founder and chairman of X-Shares Group, LLC. Jeff is an innovator in the ETF arena and his products are noteworthy. Below you can read an educated opinion about where exchange-traded funds stand in the investment arena along with information about the HealthShares product line. You also might learn something about the healthcare industry and the underlying problems which helped create the demand for these funds. As you'll see, X-shares plans to continue innovating on their unique indexing strategies and launch more ETF platforms in the coming months. Enjoy!

Continue reading "Interview with Jeffrey Feldman, Founder & Chairman, X-Shares Advisors, LLC" »

Posted by Russell Bailyn at 10:07 AM | Permalink | Comments (2) | TrackBacks (0)