קטגוריה: Uncategorized

Rosh Hashana. The time of year when you say that I am going to make myself a better person. When we think of what we can do to achieve this, there are some obvious things we can do. Spend more time with the family. Learn more Torah. Do more mitzvahs. And give more tsedaka.

One area that might not be an obvious choice for a new year’s resolution is your financial situation. You might think that there is not much you can do about, but you can. Here is a list of financial resolutions for the New Year that I believe will help you improve your life:

• Learn about your financial position. Do you know what your net worth is? How much do you have in assets (cash, investments, retirement funds, real estate)? How much are your liabilities (loans, mortgages, credit card debt)? What kind of pensions do you have – manager’s insurance (bituach menahalim), kupat gemel or a pension plan? We had one client who thought he knew about his finances. That is, until we discovered through our standard search methods that he had a bituach menahalim policy with a value of 1.5 million shekels that he had “forgotten” about. What assets have you forgotten about?

• Stop overpaying for financial services. Most people don’t know how much they are paying for financial services. Many people think they pay nothing when they buy financial products, but they are paying commissions and management fees that are not always transparent. And don’t get me started on banks. I am often stunned at the fees some of my new clients are paying when they come to me. Don’t think it is just Israeli banks. Many of my clients have accounts at European banks, who are notorious for the fees they charge which do not in any way justify the service. Be aware that fees are negotiable, and large discount are often available. I recently assisted an elderly client slash 80% off the trading commissions the bank normally charges.

• Finding the best retirement plan for your needs. There are several products on the market. Are you getting the best one for your needs, and at the lowest cost? Are you getting the lowest fees possible? A few years ago, a disreputable insurance agent convinced a new client of mine to buy a new bituach menahalim policy, when his older one had far superior terms. It cost him dearly. Israeli pension rules change constantly, and it is difficult even for professional advisors to stay on top of them. With the latest rule changes, pension funds are almost always a better choice than bituach menahalim – they are less expensive, which means you get a higher return and a more comfortable retirement.

• Allocate your investment funds in accordance with your goals and your personality. Everyone should take some risk with their portfolios, especially in today’s low interest rate environment. The question is how much risk? Basically, take as much risk that you can that will also allow you to sleep at night. I have one client thought he could tolerate a 30% allocation to stocks. He couldn’t, and I advised him to lower his exposure. Generally, stocks will provide higher returns in the long-term, but will have higher volatility. Depending on the client’s needs, I tend to advise clients to maximize their stock exposure in their retirement funds, and minimize them in their regular investment accounts.

Is this overwhelming? It doesn’t have to be. You don’t have to do it alone. An independent and objective financial planner can help you to succeed with your resolutions, and help you to achieve your financial goals. Achieving those goals will make you a better person. For it would allow you to spend more time with the family. Learn more Torah. Do more mitzvahs. And give more tsedaka.

The information is not intended to be and does not constitute financial advice or any other advice. It is general in nature and not specific to you. Before using this information to make an investment decision, you should seek the advice of a qualified investment advisor and undertake your own due diligence.

You won’t find it in any medical journals, but studies show that about 20% of the population suffers from it.  It is damaging to their family lives and their overall well-being.  While it creates stress, its ramifications can create far more stress.  It is called Financial Phobia.

You may recognize some of the symptoms in people you know and love.  You may suffer from it yourself.  Here are a few of the symptoms:

• The inability to deal with changes in your financial situation
• Trusting or relying on the wrong people
• Total neglect of financial affairs (such as not looking at statements, not knowing where your money is located, etc.). This can lead to someone taking advantage of you without you realizing it in time to save your savings.
• The symptoms can be physical. According to a study in the UK, nearly half of those that suffer from financial phobia experience a racing heart beat at the thought of dealing with their money, 15% feel frozen or immobilized, 12% feel ill and 11% feel dizzy.

Who are the prime candidates?  Women and younger people tend to be the most susceptible, but everyone is at risk.  Financial phobia is like a disease – it can strike anyone of any economic and educational status, of any age.  It is nothing to be ashamed of.  You are in good company.  But that doesn’t mean you should continue to suffer.  The time is now to get your financial life in order.

How should you deal with financial phobia?  I believe that one of the main causes of financial phobia is that many financial institutions and advisors present financial information in overly complicated terms.  Unfortunately, sometimes deliberately.  It doesn’t have to be that way.  It is not rocket science.  The key is to educate yourself about investments, bank accounts, taxes, insurance and retirement funds.  Yes, this can be overwhelming.  It can be even more overwhelming for those with dual citizenship that have to deal with more than one tax regime.  That said, you don’t need to go out and get a MBA.  Educate yourself gradually until you build your confidence.  Here are some tips on how to do that:

• Start by preparing an inventory of your bank accounts, loan accounts, investment accounts, retirement funds and insurance policies. Prepare a list of these and share them with a trusted family member in case you should become incapacitated – or worse.
• Learn the basics about stocks and bonds – their risks and rewards. Learn how you can build investment portfolios though mutual funds and ETFs.
• Learn about what you are entitled to with your retirement plans. Determine whether you have a defined benefit plan (more commonly found with government employees), where you know exactly what you will receive upon retirement, or a defined contribution plan, where you and your employer (if you are a salaried worker) make regular contributions to your retirement fund, and your retirement benefits depend on the performance of the underlying investments.
• Learn what government benefits you are entitled to. How much will you get from Bituach Leumi in retirement or in case of disability?  If you are a dual citizen, what retirement benefits that you are entitled to from government institutions such as Social Security in the United States?
• If you are a US citizen, are you in compliance with tax laws such as FATCA?
• Are you adequately covered for insurance? Your need to have adequate coverage to protect your loved ones.  Or you may have too much coverage and are wasting money on unnecessary insurance premiums.  Have you ever figured out how much money your family would need if you were to become incapacitated or were to die unexpectedly?  Obviously it is not a pleasant thought, but it is something that everyone has to deal with.

Still feel daunted by the task?  You don’t have to be alone in this process.  An independent financial advisor can help.  But it works best if you have already done some homework.  As with many other fears, the best way to defeat financial phobia is to acknowledge your fear and educate yourself so that it just doesn‘t seem so scary any more.