For anyone new to investing (and even for those who are not so new) the financial terminology used by investment professionals can be unfamiliar and a bit confusing. When you sit down with an advisor to discuss your investment portfolio, there are several words and phrases that are likely to arise.
One way to strategically transfer wealth to your heirs and build generational wealth is through a strategic gifting plan. Here we illustrate how early contributions can compound into significant values over the recipient’s lifetime. Specifically, gifting $25,000 annually for the first 10 years may have an ending value of more than $14 million in 90 years. Moreover, starting at age 60 the recipient can spend 5% from this portfolio annually over the next 30 years for total distributions of more than $17 million. (Both figures are adjusted for 3% inflation.)
Note: Figures do not take into consideration underlying annuity or mutual fund fees, taxes or trading costs. Performance data depicts historical performance and is not meant to predict future results.
Parsec invests in a variety of securities for its clients. These may include mutual funds, exchange traded funds (“ETFs”), and individual stocks, among others. All of these investments can and do experience significant price pullbacks from time to time. While Parsec’s research committee focuses on investments it can hold for the long-term and performs significant due diligence before adding any new positions, price declines still happen. In this article we will discuss how we monitor investment securities and our process when a stock or fund does not perform as expected.
This illustration shows a 5% spending from a portfolio of large US companies as illustrated by the S&P 500 index. The analysis assumes you spend 5% of the prior year-end balance, which starts at $1 million in 1970. This timeline includes a decade of weak market returns in the 1970s and then a historically bad decade of returns in the 2000s. Even with these tough market environments the balance ended 2020 at $12.8 million and produced portfolio spending of close to $11.8 million.
Source: Duff & Phelps, LLC. 2020 SBBI® Yearbook. Illustration assumes annual spending was taken at the beginning of the year. Past performance is no guarantee of future results. *Spending figures do not take into consideration inflation.
I heard about a study that found people were more likely to vote if you ask them, “are you a voter?” as opposed to, “do you plan on voting?” The way you view yourself matters. If you identify as a voter, then you are more likely to go to the polls or send in your ballot at election time. It’s the same with fitness – if you identify as a runner, you are more likely to run consistently, because it’s not just something you do, it’s who you are.
The maximum individual retirement account contribution for 2021 is $6,000 ($7,000 if aged 50 and over). The question of choosing between a Traditional IRA and Roth IRA largely comes down to when it’s most opportunistic for you to pay taxes. A Traditional IRA is a great option if you’re in your mid-to-late career and in
Earned income stops for everyone at some point, and people then need to navigate the transition from saving for retirement to spending from their investment portfolio.
You may have heard about direct indexing, as it has become a popular topic in financial circles over the last couple of years.
This whitepaper examines the differences, risks and benefits of passive versus active investments, as well as the factors driving the continuing investor preference for passively managed strategies. We’ll discuss why investing in an all-passive mix does not remove all decisions that an investor needs to make with regard to their portfolio. Finally, we’ll review the guidelines we use at Parsec Financial to determine an optimal mix of active and passive investments.
Articles about the benefits of meditation are everywhere these days, and for good reason. 2020 was an unusually stressful year, and people are looking for non-addictive, healthy ways to manage their stress and anxiety.