Category: Articles - Page 9

Posted By Mays Financial

What are the Objectives of Estate Planning

We’ve discussed the importance of a solid estate plan and how estate planning can help you in other articles, but there is more to it. A comprehensive estate plan will do more than just make things easier for the family when an individual passes and maximize the assets that are passed on. A comprehensive estate plan will provide:

Asset Protection

Provide protection to the individual and family. This protection extends to business interests, real assets and joint ownerships. Additionally, provisions such as a durable power of attorney or a durable power of attorney for health care will ensure that the individual’s needs and desires are still met in case of incapacitation.

Balance

Help plan for a balance between use of assets during lifetime and ensuring enough is left to take care of the family when the individual passes.

Asset Distribution

Establish guidance for efficient and structured distribution of assets while both minimizing taxes and ensuring specific assets reach the desired individuals and entities.

Secure the Family’s Future

Secure the future of the family by arranging for the assistance of trusted professionals to help in the wise and effective management of financial assets if necessary. This will ensure the future financial security of the family. This is especially important in relationships when the surviving spouse may not be knowledgeable in the management of finances or experiences excessive anxiety with the newly acquired responsibility.

Posted By Mays Financial

How Important is Estate Planning? More Than You Know

Estate planning is the single most overlooked part of a financial plan. Many assume that they are not wealthy enough for a financial plan or too young to worry about it. An estate plan isn’t for you, it’s for your survivors. Anyone can pass away at any age, accidents happen. It requires minimal effort to prepare and update an estate plan, especially in the early years. [Read more…] about How Important is Estate Planning? More Than You Know

Posted By Mays Financial

What is Estate Planning and How Can it Help Me?

An estate is composed of everything the individual has rights to. This can include property, business interests, investments, joint ownership, life insurance owned by the individual (and those gifted within three years of death), retirement benefits, possessions, and any other personal assets.

An estate plan can be thought of as a portal. When an individual passes away, all of their assets must pass through this portal. First they will pass through the probate or non-probate filter. They will then pass through multiple other filters (the non-probate journey being much shorter) before the remainder finally reaches the desired individual or entity. [Read more…] about What is Estate Planning and How Can it Help Me?

Posted By Mays Financial

Importance of Understanding Risk When Investing

Accepting risk is acknowledging the possibility of losing some or all of the investment principal. High risk typically means high volatility. When something is high in volatility, it is unpredictably irresolute. Both timing and degree of fluctuation are difficult to anticipate. When something is low in volatility its movements are predictable with a high degree of certainty, it is low risk.

Risk is not independent and should not be considered in a vacuum. Risk generally correlates positively with return. This means that as risk increases, so do potential returns. Unlike other risks we accept, there is no such thing as investment insurance to protect against bad investments.

When considering risk you must weigh the possible gains vs. the possible losses. The degree of risk that someone is willing to accept depends on a number of factors. One is simply personal preference. How much risk can be comfortably tolerated? A second is investment goal: Growth? Capital preservation? Income? A third is time horizon: how much time is there until the funds are required? High risk investments tend to do well over the long-term because time has a way of taming risk. Low risk investments do well in the short-term because they are more predictable and sometimes more liquid. There are many factors in determining acceptable risk; most of them tend to overlap.

Posted By Mays Financial

Averse to Risk? Most of us Are

Risk aversion is a trait common to most individuals. This is why we buy insurance. Most people must be compensated for accepting additional risk. This is why investors demand higher returns on riskier investments. A risk averse person must be compensated for accepting additional risk even if the expected value is the same. A risk neutral person only cares about expected value. [Read more…] about Averse to Risk? Most of us Are

Posted By Mays Financial

How Much Does Risk Cost? It’s too Expensive to Ignore

Risk is expensive. Most people are risk averse. Both people and companies must be compensated in some way for accepting more risk. This is why individuals with poor driving records pay more for insurance and investors require higher returns on riskier investments.

The expense of managing risk is directly correlated with the expected losses. Expected losses can be determined by multiplying the severity (cost) by the frequency. [Read more…] about How Much Does Risk Cost? It’s too Expensive to Ignore