March 2021 Newsletter
Submitted by Dorval & Chorne on March 1st, 2021By Keagan Kinsella | March 1, 2021
March is here, and spring is in the air! With tax season approaching, now is the perfect time to “Spring clean” your finances… We’ve certainly seen an increase of people coming in to talk about financial planning! In this month’s newsletter we’re going to be talking about:
- Counting on retirement calculators? Time to think differently!
- Question of the week- “I hear all about inflation…how much does it really impact my life?”
- Monopoly Deal, my latest card game obsession, inspired a financial planning life-lesson!
The problem with retirement calculators
It was Monday morning, and after a workout, my Apple Watch buzzed. An alert popped up, “Way to go Keagan! You’re on a great track to meet your goals this week!” My goal is 5 workouts. I laughed and thought about how I had never really been praised for doing 1/5 of a goal…but I guess my watch is my biggest fan?
Technology is so advanced now; a lot of people rely on it to make decisions throughout their day. One of the most handy, online calculators! Whether it be a mortgage payment calculator, workout tracker, or GPA estimator—there are calculators for everything!
One of the most common calculators we see people utilize are retirement calculators. Websites like Fidelity, and Transamerica are beginning to include these calculators on their clients’ 401K homepages. The calculator takes in the information it knows such as your age, income, and contribution percentage and produces a visual that alerts how “well” you’re doing on retirement. We’ve seen: “gages that show your percent % success in retirement,” a “retirement roadmap” showing your progress, or we’ve also seen a weather report saying you’re “stormy, partly cloudy, or sunny.”
The problem is, if you are 30 years old, and hear you’re in “stormy” position for retirement… what exactly does that mean? The calculator often doesn’t know about things like if you have a pension, how much you have in reserves, if you are debt free, your spouse’s income, or how expensive your lifestyle is! Moral of the story, they are coming up with an answer based on a tiny portion of the equation.
Not to mention, some of these companies may have a tiny conflict of interest telling you that you need to invest more…conveniently with them! Talking with an independent financial planner to see what action items you personally should be taking to make sure you are on track for retirement gives you a much clearer picture than what an online calculator says.
Question of the week, “What does inflation mean in my life anyway?”
If you’ve dipped your toes at all into what’s going on in the housing market lately, you’d know that house prices have been skyrocketing and real estate is selling in record speeds at exorbitant prices! It makes you wonder…how long can this last?
We met with a couple a few weeks ago who was trying to decide when the best time was to buy their new house. They wanted to know if they should buy now to invest in real estate and stay ahead of inflation. We asked what does inflation mean to them? They weren’t able to answer…they just knew it is something “they say” you should worry about!
In general, the most popular measure of inflation is calculated by the Bureau of Labor Statistics, who produces the Consumer Price Index (CPI). The government is picking a basket of goods and services and tracking the cost. But is that same basket of goods and services the same for everyone?
There are some items where inflation is easy to see: college tuition costs, gasoline, a gallon of milk, restaurant menu items, healthcare & medication prices.
However, have you considered that some things have actually given you “more bang for your buck” as time goes on? Think about this. Back when a 16 GB iPhone 4S was released, it had a price tag of $649. Meanwhile, many years and advancements later, a much more powerful 64 GB iPhone 8 cost you $699!
This can be seen in many forms of technology like flat screen TVs, internet prices, clothing, music (think about how we used to pay 99 cents per song on iTunes!), and domestic flights—to name a few! Chances are, you spend a lot more of your money on these kinds of items over the things that the government includes in their basket. Moral of the story—inflation doesn’t affect everyone in the same way! Make decisions based on quality of life instead.
Monopoly Deal inspired financial planning lesson!
One of my longtime favorite board games has always been Monopoly. I remember not having anyone to play with me when I was little because nobody wanted to commit to a potentially multiple hour-long game. When I found out there was a condensed version (we’re talking 15 minutes) of Monopoly in a card game… I knew I had to try it. Little did I know I was finding my newest obsession! So much so, it’s consumed my brain to the point where I am making connections to the financial planning world.
If you haven’t played before, you’re getting some tips here!
Similar to the board game, there are two elements of finding success in Monopoly—acquiring investment properties and also cash accumulation. The objective of the game is to be the first to get 3 full sets of properties. One of the first things you’ll learn is the importance of saving and maintaining a solid amount in your “reserves,” so you are able to pay for things that come up like “rent” or other “you owe me money” cards! If you focus too much on accumulating as many properties as you can at first, and not saving—you won’t end up in a good place.
This is how it is in real life! We believe your resources are just tools to help you accomplish your goals. While it is important to have a good financial foundation, it’s not always about wealth accumulation. It is about using your resources (cash) as a tool to help accomplish an even more important goal. While that may be a down payment on a real-life property, we often see it be for things like going back to grad school, buying a new car, or starting a family.
In Monopoly, and in the real world—the winner isn’t the one who ends up with the most money, it’s who used it in ways that aligned with their priorities and quality of life. I highly recommend you find a set of cards and play!
All right, that’s it for this month. Stay tuned for my next newsletter where I will continue to share and inform in new and creative ways. If you want to sign up for the newsletter email, click here (and let others know they can sign up.) Last but not least, let’s connect on LinkedIn!
Advisory services provided through AdvisorNet Wealth Management (AWM). Dorval & Chorne Financial Advisors and AWM are not affiliated.