Jesse Abercrombie, ABC and IEC member, focuses on the financial planning needs of individuals and business owners in the construction industry. For any questions, please contact him at 972-239-0852 or firstname.lastname@example.org.
Should You Take a Pension Buyout?
Have you recently received a pension buyout offer? If so, you need to decide if you should take the buyout, which could provide you with a potentially large lump sum, or continue accepting your regular pension payments for the rest of your life. It’s a big decision.
Investment Mistakes to Watch for. . . at Different Stages of Life
As an investor, how can you avoid making mistakes? It’s not always easy, because investing can be full of potential pitfalls. But if you know what the most common mistakes are at different stages of an investor’s life, you may have a better chance of avoiding these costly errors.
401(k) Loans: The Last Resort?
As you’re well aware, we’re living in difficult economic times. Consequently, you may be forced to make some financial moves you wouldn’t normally undertake. One such move you might be considering is taking out a loan from your 401(k) plan — but is this a good idea?
Diversify Your Investment Risk
All investments carry risk. But, as an investor, one of the biggest risks you face is that of not achieving your long-term goals, such as enjoying a comfortable retirement and remaining financially independent throughout your life. To help reach your objectives, you need to own a variety of investment vehicles — and each carries its own type of risk.
Avoid Dangers of Over-Concentration
When you were in school, you had to concentrate on your studies. When you began your career, you had to concentrate on your work. In fact, in just about every endeavor in life, concentration is essential for success. However, as an investor, you may find that you actually don’t want to concentrate too much
Don’t Let Downgrade Deter You from Investing
Just when you thought you could take a break from financial drama, following the resolution of the debt ceiling issue, here comes Act 2: the downgrade of the U.S. long-term credit rating. As a citizen, you may be feeling frustrated. And as an investor, you might be getting worried. But is this concern really justified?
Women Business Owners Need Retirement Plans
If you’re a woman who owns a business, you’ve got plenty of company. In fact, women own more than 10 million U.S. companies, and women-owned businesses account for about 40% of all privately held firms in the U.S., according to the Center for Women’s Business Research. Clearly, the good news is that women like you are entering the small-business arena at a rapid pace. The not-so-good news is that you may be facing a retirement savings gap in comparison to male business owners.
Know Your Investment Risks and How to Respond
When you invest, you take some risks. While you can’t totally avoid these risks, you can take steps to help reduce their impact and increase your comfort level. And the more comfortable you are with your investments, the easier it will be to follow a long-term strategy that can help you meet your goals.
Be Prepared for Early and Possibly Unwanted Retirement
Given the economic climate we’re in, you may one day be faced with a downsizing or otherwise be forced to retire earlier than you had planned. I’ve seen many in the construction industry lay off employees and in some cases have to shut their doors. But even if that happens, you can still maintain control of your financial future — if you make the right moves.
Ring in Some Financial New Year’s Resolutions
Now that 2011 is here, you may want to make some New Year’s resolutions. Planning to volunteer? Go to the gym more often? Learn a new language? All worthy ambitions, of course, but this year, why not add some financial resolutions as well?
Can You Benefit from Tax Swaps?
In all of my years working with electrical professionals I’ve yet to meet someone who likes paying taxes. We all know that it’s a part of life but it seems that the more successful we become and the older we get, it becomes more of an issue. Many people I work with benefit from investing in tax-free bonds and the tax benefits that are associated with them. But what if you own equities? Like most investors, you have probably been cheered by the market rally we’ve seen since March 2009. Yet, despite this dramatic reversal of fortune, you still may own investments that have lost value since you purchased them. If that’s the case, you may want to put these "losers” to work before 2010 ends. How? By using them in "tax swaps.”
When Investing, Learn Aspects of Risks
Since I started working with electrical contractors and others in the electrical industry, I’ve been fortunate to learn things about the industry that most financial advisors don’t know. Like when it comes to an arc flash, preventive maintenance, worker training, and an effective safety program can significantly reduce arc flash exposure. Preventive maintenance should be conducted on a routine basis to ensure safe operation. But what should investors in the electrical industry be doing to minimize and to know the aspects of risk in their portfolio? Instead of trying to invest risk-free, which is impossible, you should learn to recognize the different types of investment risk while becoming familiar with your own risk tolerance.
Have You Built Your…Investment Pyramid?
A few months ago I spoke with a very successful contractor about a trip that he and his wife made to see the pyramids and he spoke of the process of constructing the pyramids then versus now. Of the "Seven Wonders of the Ancient World,” the only one still in existence is the Great Pyramid of Giza. This tells you something about the strength of the pyramid structure, but it also suggests that the pyramid may be a good metaphor for other endeavors that you wish to endure — such as your investment strategy.
Own an Electrical Business? Put a Retirement Plan in Place
If you own a business in the electrical industry, you have a lot to think about — sales, expenses, marketing, cash flow, competition — the list goes on and on. However, by spending so much time on the issues of today, you may overlook the concerns of tomorrow.
How to Invest During a Recession
We are now in the seventeenth month of the recession, which began in December 2007, according to the National Bureau of Economic Research. Not only is this a long recession, but it’s also a severe one, marked by painfully high levels of job losses, a sharply reduced credit flow and a drop in the value...
Time to Sell…or Time to Buy?
We’re in a recession, which could be severe. Several financial services companies have either collapsed or been bailed out by the government. And the stock market is down about 45 percent since hitting its peak in October of 2007. Is this a "perfect storm” that should blow investors out of the market — or is it actually an opportunity for investors to jump back in? Most of my construction clients tell me that their business is their biggest gamble and they can’t afford to take as much risk outside of the businesses. So should you sell now to stop the bleeding or buy even more?
A Checklist for Surviving Financial Combat
Over the past few weeks, the news has been almost incomprehensible. It’s hard for many of us to make sense of the failure of major Wall Street firms and large banks and the $700 billion bailout of the financial sector. And it’s hard for investors to be calm when stocks have fallen almost 30 percent from their all-time high a year ago. What can you do to cope? Consider the following checklist for surviving a financial crisis.
Who’s Looking Out for Individual Investors?
If you’ve been investing for a while, you know that there are few guarantees in the investment world and that, in one way or another, you’re going to be taking some risks with your money. The construction industry already is a very risky business and trust is very important. I’ve always thought that sometimes the owners of construction businesses are so busy they never really know if their advisors have their best interests at heart. Still, you’d like to know that you’re participating in a system that is fair to everyone and is governed by rules. So you may ask yourself, Who’s looking out for me?
Follow a Withdrawl Strategy that Won’t Leave You Empty
One of the things that I enjoy about working with contractors and business owners in the electrical industry is that they never really plan to retire.
Take Advantage of Employee Financial Education
In the old days, if you worked for a company, your retirement income would likely have been in the form of a pension, with the amount based on your income level and years of service. Apart from those factors, you had little control over the size of your pension benefits.
Can You Benefit from Roth 401(k)?
As another year zips by, you are a year closer to retirement. Even though that day may still be a long time away, it will eventually arrive—so you’ll need to prepare for it. Will you sell your business and use some of the income from it in retirement, or will you stay on as a consultant and continue to receive pay for your services? Both are smart choices; however, they still represent taxable income. This is taxable income that most in the electrical industry want to avoid. Recently one more retirement savings vehicle has been added—the Roth 401(k).
To Build Wealth, Look at Both Sides of the Balance Sheet
At a recent golf tournament for the construction industry, I spoke with a gentleman about a once very successful contractor who is no longer in business. I instantly figured that the gentleman had sold his business and pursued other endeavors. However, I found out that although he was successful, every dollar he made was spent on homes, cars and boats. This isn’t as common in the construction industry as it is in other industries, but I see more and more business owners get leveraged right out of business.
Be Prepared for Alternative Minimum Tax
Many electrical contractors and inspectors probably were not that familiar with the alternative minimum tax (AMT) a few years ago. However, in the past few years things have really changed. Even the name may trigger a lot of speculation. What, exactly, is this tax an "alternative” to? And, what does the word "minimum” mean? Is it the smallest possible tax that can be assessed? If so, who has to pay it?
Opening an Electrical Business? Don’t Give Up Financial Security
Last year, more than 670,000 businesses opened their doors, according to the U.S. Small Business Administration. In fact, hundreds of thousands of people set up their own shops every single year. If you’re considering startling your own electrical contracting or inspection firm, you’ve got a lot to be excited about, and you may be prepared to make large sacrifices to help your business succeed. But there’s one sacrifice you don’t have to make: your financial security.
What Do Those Economic Indicators Mean, Anyway?
If you follow the news regularly, you will see many different reports on the state of the economy. Government officials and economists closely watch these reports — and, as an investor, maybe you should, too. Here are a few of the most important economic indicators to consider.
New Tax Laws May Aid Your Investment Strategy
If you’re an investor, especially a business owner in the higher tax brackets, you’ll want to pay close attention to some of the provisions of a bill that President Bush signed into law on May 17. The new legislation extends the lower tax rates on capital gains and stock dividends, temporarily removes restrictions on transfers from traditional to Roth IRAs, and raises the exemption level on the alternative minimum tax (AMT). Clearly, the new laws can have a big impact on your investment strategies over the next few years.
Should Changes at "The Fed” Affect How You Invest?
It’s been a long time since someone other than Alan Greenspan has served as chairman of the Federal Reserve Board of Governors. In fact, Greenspan has been at his current job since 1987. But in a few weeks, we’ll see a "changing of the guard” as Ben Bernanke takes the helm at the Fed. This is big news for economists and policymakers, but what about individual investors in the electrical business? How will you be affected by the emergence of a new Fed chairman?
Time to Choose a Small-Business Retirement Plan
If you’re in the electrical industry, you’re always thinking about today. How can you get more projects today? Is your cash flow sufficient for today? Is my bid competitive? What are your competitors doing today? However, you can’t forget about tomorrow. Specifically, you need to make sure you’re building sufficient financial resources to enjoy a comfortable retirement. To help you do just that, you need the right small-business retirement plan.
Taking Time Out from Investing Can Be Costly
The life of a contractor requires taking breaks from time to time. Each day it is critical to take a one-hour break to get away from the bidding and the day-to-day frenzy. It’s also a good idea to take a break at least once a year so that you’re able to refresh and replenish. But when it comes to financial planning, is it a good idea to take a break or time out? Not so. If you’ve been investing over the past decade, you probably have good reason to be confused about the stock market’s performance.
How Will Oil Prices Affect Your Investment Plans
Even before Hurricane Katrina caused its almost incomprehensible damage to the Gulf Coast, most of us shuddered when we had to fill our cars’ gas tanks. With prices at $3 a gallon in some parts of the country, and crude oil hitting $70 per barrel, we were already in uncharted territory. Then, Katrina temporarily knocked out about 12 percent of U.S. refining capacity, along with a significant part of the Gulf’s natural gas and oil production. So, as a driver, you probably shouldn’t expect too much relief at the pump any time soon. But how about as an investor? Do you need to adjust your investment strategy in response to high oil prices?
What Does the Falling Dollar Mean to You?
As contractors, you like to see the prices of things fall. Whenever the price of copper goes down, electrical contractors are able to bid more effectively. Whenever the price of oil goes down, it doesn’t cost as much to drive your utility trucks and vans around from project to project. If you follow economic news, you know that the U.S. dollar has dropped sharply against every major world currency. Economist and government officials are keenly interested in the falling dollar. You probably have even heard your colleagues and competitors mention it as a concern. But when the dollar falls is that a good thing? And what does it mean to you as an individual investor?
Trusts Can Help You Achieve Your Estate Planning Goals
I’ve been interviewing electrical contractors and others in the construction business lately about their perceptions of investing as it relates to working with people like myself versus doing it on their on. I always tell them how important it is to focus on their contracting business. I tell them this because there is a lot more to creating and preserving wealth than watching MSNBC while competing for bids with competitors. The wealth you’ve built really doesn’t mean much if Uncle Sam sticks his hand in at your passing. Estate planning is extremely important for the highly successful electrical contractor who owns several pieces of real estate, retirement plans and other businesses.
Steer Your 401k Into a "Safe Harbor”
If you run your own small business, you may well be in need of a good retirement plan. At one time, you might have considered a 401(k), only to discard the idea when you realized that some of the costs and burdens—such as testing requirements to ensure fair contributions to all employees—might prevent you and your key employees from fully benefiting from the plan. But now, you’ve got a "safe harbor” in which to place your 401(k), away from the uncertainties of whether you will benefit.
Municipal Bonds Offer Tax Benefits
In the construction industry, contractors of every type construct new schools, highways, and other municipal projects. Those same people who upgrade our lives can also reap the tax benefits these projects carry.
Which Business Retirement Plan Is Right for You?
If you run a small business in the electrical industry, you’ve got no shortage of concerns: cash flow, marketing, the ebb and flow of the economy—you name it. In fact, you have so many issues to ponder you might find it hard to take the time to choose a retirement plan for your business. And yet, it’s worth the effort—because the right plan can offer the opportunity to make your life a lot easier in the days when you don’t have so much to think about.
Is Your Money Working As Hard As You?
Labor Day will be here again before you know it—the day when we officially recognize the contributions that workers have made to this country. But this Labor Day, why not also consider how hard your money is working for you? You may be surprised by what you find.
Your Retirement Clock is Ticking
Most members of the electrical industry know they need to save for retirement, but often they aren’t sure where to begin. "How much do I need to save each year?” "Can I maintain my current standard of living?” "When can I afford to retire?”