What Happens if You Have a Financial Windfall?

Do you know what to do if you suddenly come into a cash windfall?

A cash windfall isn’t something for which you can plan ahead of time. It’s also not something you should ever count on. But knowing what to do if it happens can be extremely beneficial.

Should you spend it? Invest it? Pay off debt? All of the above?

Those answers will depend on the amount of money received and your financial situation. The answer will not be the same for everyone.

Windfall sizes can vary dramatically – from a small one that can help you eliminate a debt or allow for a  major purchase, to an even larger one that can make you financially independent, or to a size that may be more money than you could ever spend in your lifetime.

No matter the size of the windfall, the first thing you should do is resist the temptation to rush into anything – be it a purchase, an investment or even quitting your job. Formatting a plan before rushing into anything will help you avoid any regretful decisions. The most important tool you have when it comes to money is knowledge.

Secondly, separate the windfall from your usual accounts to avoid spending it. You could put it in a short-term CD or in a new interest-earning savings account until you come up with a plan. This will give you time to decide on how the windfall can serve you now and in the future.

It also would be wise to meet with a financial advisor. A financial advisor will help you map out the plan for your financial future and will help you get good use of the money. And if the windfall is big enough, they could help you plan for generations to come.

Together, you’ll assess your current financial situation and your financial goals and formulate a plan to put you on a successful path.

Coming into a significant amount of money may be cause for reason to celebrate, but it will be even more rewarding if you have a plan on what to do with the unexpected money. If you’re fortunate enough to have unexpected money come your way, don’t miss out on the opportunity to get ahead.

Financially Fit is your home fitness guide for all things financial, provided by RCB Bank. Find money-building tips, insights and inspiration to help you improve your financial well-being at RCBbank.com/GetFit. Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. RCB Bank, Member FDIC.

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Money Market Accounts and Financial Planning

money market savings

What is a Money Market account?

A money market account is an interest bearing account that typically earns higher interest than a traditional savings account. The advantage of a money market savings account is the ability to earn a higher interest rate, insurance protection and the ability to write checks and use a debit card. Banks generally require a minimum balance to be met when you open a money market account and will impose fees if the amount in the account falls below the minimum.

What are the benefits of a Money Market account?

Besides debit card and check writing privileges, money market accounts offer a number of benefits.

  • They allow for guaranteed earnings and FDIC insurance protection of up to $250,000 per depositor per account.
  • Your money is also easily accessible and can be immediately withdrawn if you need it.
  • Money market accounts also lack the risk of traditional investments.

When should I get a Money Market account? 

There are many situations when a money market account is a great savings option. If you have a short-term savings goal such as a home renovation, wedding, tax payments or funds for a new car, money market accounts are very useful. They can also be used to create an emergency fund since you have unlimited access to the money and it will accrue higher interest when not being used. It is useful to note that Money Market mutual funds are different from Money Market accounts and do not have the benefits of FDIC insurance.

Money Market vs. CD

Whether you choose a Money Market or CD (Certificate of Deposit) depends on your goals. While both accounts are FDIC insured, higher interest, low risk investments, there are some key differences. The main difference between a Money Market account and a CD is that you do not have regular access to your funds after opening a CD. If you choose a longer deposit period, you will get a better interest rate, however, you will be penalized if you pull the funds out early. If you have a longer-term financial goal, such as five or ten years, it may be better to secure a higher interest yield.

The key is to talk with a financial planner before making any decisions about your investment strategy. I am here to help, even if you are not an RCB Bank customer. Whether you are a customer or not, RCB Bank is here to help. Our wealth advisors can help with all of your questions about retirement investments. Give us a call at 855-226-5722.

Opinions expressed above are the personal opinions of Arnold Beevers and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB.RCB Bank is an Equal Housing Lender and member FDIC.

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How to Build Wealth: The Power of Time

At 25 years, a stack of zero coins. At 35 years, a stack of 5 coins. At 40 years, a stack of 37 coins.

Compounding is a powerhouse tool when it comes to building wealth. When you put money into an investment account, you earn a varied rate of return on the balance. If you leave your money in the account, it can grow. An RCB Bank wealth advisor can help you plan a savings strategy built for your individual lifestyle goals and needs.

Example #1: College Savings

The Jones and Smith families each have a baby and start saving $150 per month for their child’s college education. The Smith’s use an investment account to build more wealth.

With no annual return, the Jones' had $10,800 after six years, $21,600 after twelve years, and $32,400 after eighteen years with a kid going off to college. With a 6% annual return, the Smiths had $12,960 after six years, $31,344 after twelve years, and $57,422 after eighteen years with a kid going off to college.

Example #2: Retirement Savings

Kyle Jones and Kelly Smith put $400 per month into their retirement accounts and earn the same rate of return. Kelly started saving at age 25 while Kyle waited until he was 35 to start.

Connect with an RCB Bank Trust Wealth Advisor in your area.

When it comes to investing, there are risks. Consult a financial advisor before beginning any investment plan. Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. The monthly interest calculation expressed above is not for any specific account type and is meant for generic illustration purposes only. Investment products are not insured by the FDIC. Not a deposit or other obligation of, or guaranteed by the depository institution. Subject to investment risks, including possible loss of the principal amount invested. Wealth advisors do not provide tax, legal or accounting advice. Seek advice of professional tax consultant.
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A Balanced Approach to Funding Your Retirement

Use multiple funding sources to build a sturdier retirement savings plan.

Imagine your retirement fund as the seat of a stool. Its stability depends on the construction of the legs. Put all the weight on one leg of the stool and you risk a wobbly future. Instead, use multiple funding sources to build a sturdier retirement savings plan. Depending on your desired lifestyle, we suggest saving between 10-20% of your salary to fund your retirement. Use this balanced approach to diversify savings.

First Leg: Employer Plan

If your employer retirement plan offers a match, fund this account up to the full match if not more. If your employer does not offer a match, you will want to contribute more money toward this account.

Second Leg: Social Security

Social Security benefits can vary drastically depending on how long you work, the amount you earn during your highest earning years and when you elect to claim your benefits. The generation retiring now is receiving about 35-40% of their former salary in the form of Social Security benefits.

Third Leg: Personal Savings

This may include savings accounts, IRAs, CDs, investment accounts and your home’s equity. While it is possible to build a solid three-legged stool, you may want to reinforce your retirement fund with a fourth leg.

Fourth Leg: Retirement Income

Income may be in the form of a rental property, part-time job or small home-based business. However you go about it, you have to sit on your retirement stool, so make it is sturdy enough to hold you during your retirement years. Find a wealth advisor you trust to help you plan a retirement savings strategy built for your individual lifestyle goals and needs.

Save now. Save often. Your future self will thank you.

We offer free portfolio reviews at no cost, no obligation. We’d be happy to take a look at your current portfolio and offer a second opinion to ensure you’re getting the most out of your investments.

Connect with an RCB Bank Trust Wealth Advisor in your area.

Invest in your retirement. RCBbank.com/GetFit

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. Investment products are not insured by FDIC or any government agency, Not a bank guarantee, Not a deposit, Subject to risk and may lose value.

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Retirement Planning Life Stages

No matter what stage of life you are in, your current and future financial well-being should ALWAYS be in your plans. Taking full advantage of your workplace retirement savings options plus utilizing the help of a professional wealth advisor can help you build enough resources to enjoy the retirement lifestyle you want.

Baby Boomers: Born 1946-1964

You are at or nearing retirement age. Boomers are breaking boundaries and re-defining retirement for the generations to follow.

  • Have you accumulated enough assets to comfortably supplement Social Security?
  • Do you know how long those assets might last?
  • Are you confident you are managing your investments to preserve what you’ve built?

Generation X: Born 1965-1980

You have limited time left to accumulate sufficient assets for retirement. The temptation to raid your retirement savings to help fund your children’s college or to provide care for aging parents may be very real for you.

  • Do you understand the costs of this decision?
  • Do you need help prioritizing your financial obligations?
  • Are you saving enough now to generate the income you will need for 20-35 years of life in retirement?

Generation Y: Born 1981-1996

Retirement seems far away and may not be on your radar. Statistically, your generation saves better than the one before. But, your mobility often causes small repeated cash-outs from retirement accounts as you move from job to job, leaving little savings as the years go by.

  • Time is on your side if you take advantage of it now.
  • Aim to save a minimum of 10% (including your employer’s contribution, if available, and any IRA’s or other plans).
  • Provide for your future self by including retirement savings in your current budget.

Generation Z: Born 1997-Present

You may not have the obligations of a mortgage or children. This puts you in a prime position to build your retirement nest egg.

  • The sooner you start saving, the longer your money has a chance to grow with compounding interest.
  • Aim to put at least 5% away for retirement.
  • Don’t be tempted to cash out your retirement account if you switch jobs.
  • Make retirement savings a necessary expense in your budget.

Investment products not insured by the FDIC. Not a deposit or other obligation of, or guaranteed by the depository institution. Subject to investment risks, including possible loss of principal amount invested. The information provided is for educational purposes only and does not constitute tax, investment or legal advice. Consult a professional wealth advisor to discuss your individual retirement savings needs.

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Sustainable. Responsible. Investing.

Get$Fit: Invest in the future you want.

Hand holds sustainable world

There is a growing trend in investing — sustainable, responsible and impact investing (SRI)— that blends personal values and principles with investment choices.

Aligning investments with values.

Sustainable investors consciously choose to invest in companies that contribute to advancements in environmental, social and corporate governance (ESG) practices, e.g., clean tech, labor and human rights, anti-corruption policies.

Sustainable investing has grown 33 percent in the U.S. since 2014. That equates to $8.72 trillion. SRI now accounts for more than one out of every five dollars under professional management, according to the latest SRI trends report, published by The Forum for Sustainable and Responsible Investment Foundation (US SIF).

Sustainable investing performs in line with traditional investing.

Research also reveals a positive correlation between SRI strategies and corporate financial performance. A 2017 study conducted by Nuveen TIAA Investments found that investing in SRI strategies did not lead to a decrease in performance or an increase in risk.

The MSCI KLD 400 Social Index, one of the first socially responsible investing indexes, has performed right in line with the S&P 500.

In fact, during the February 2018 market downturn, SRI funds actually outperformed the broad market, according to Morningstar investment research company.

Wondering what impact your investments are making?

Ask your financial advisor for a portfolio review to see if your current investments include SRI companies.

Learn more about SRI at ussif.org, or speak with a financial advisor.

We offer free portfolio reviews at no cost, no obligation. We’d be happy to take a look at your current portfolio and offer a second opinion to ensure you’re getting the most out of your investments.

Connect with an RCB Bank Trust Wealth Advisor in your area.

Invest in your values. RCBbank.com/GetFit

Investment products are Not insured by the FDIC or any government agency, Not a deposit, Not a bank guarantee, subject to risks and may lose value.
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Bucket Approach to Investing

Bucket with money in it

Investing is a tool for building wealth.

Legendary investor Warren Buffett defines investing as “… the process of laying out money now to receive more money in the future.”

The key to successful investing is setting clear-cut goals. Know what you want, the cost to get it and how long you have to save.

We all have different comfort levels when it comes to investing our money. We call this risk tolerance. The concept of risk tolerance refers not only to your level of comfort in taking a risk, but also your financial ability to endure the consequences of loss.

Therefore, when it comes to investing, there is no one- size-fits-all strategy.  When I talk about investing with my clients, I like to use a bucket visualization. Imagine investing as three buckets.

Everyone needs to begin with a foundation – bucket one. This is your readily available cash, including your savings, emergency fund and short-term investments.

Once you have bucket one filled, you are ready to toss money into buckets two and three, your mid-term and long-term goals. The amount you invest in each bucket varies by your time horizon and risk tolerance. Bucket two consists of low-risk investments while bucket three is long-term, higher growth risk investments.

As with any plan, it is important to monitor your portfolio to ensure you stay on track with your goals.

If you plan to work with a financial advisor, make sure they are working for you with your best interest in mind. It’s important that you have an open line of communication with your advisor.

I am here to help answer questions you may have about investing even if you are not an RCB Bank customer. Feel free to call me at 918.342.7100 or email mwood@bankrcb.net.

At RCB Bank Trust, we offer professional recommendations at no cost, no obligation.

We provide a conservative approach to growing and preserving wealth tailored to your individual financial needs. Call one of our wealth advisors today and request your free review.

We offer free portfolio reviews at no cost, no obligation. We’d be happy to take a look at your current portfolio and offer a second opinion to ensure you’re getting the most out of your investments. Connect with a wealth advisor in your area.

The bucket concept was originally created by planning guru Harold Evensky. It is one of many approaches to investing.
Investment products are not a deposit. Not insured by the FDIC or any federal government agency. Not guaranteed by the Bank. Subject to risk and may go down in value.
Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. Investment products are not insured by the FDIC. Not a deposit or other obligation of, or guaranteed by the depository institution. Subject to investment risks, including possible loss of the principal amount invested. Ask for details.
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How to React to Stock Market Swings

From the opinion of a long-term investor

Business men looking at stock

Recent news about dramatic declines in the Dow Jones have been front and center lately.  While the “Dow” is often first quoted on the news, it is not a particularly good representation of the U.S. stock market.  It is just an index of 30 companies. Also, it is price-weighted, which means the companies with the highest stock price carry the most weight. The five companies that currently carry the greatest weight in the Dow are Boeing, Goldman Sachs, 3M, United Health Group, and Home Depot. However, none of these companies crack the top ten when looking at the largest companies in the U.S. by market capitalization.

Alternatively, the S&P 500 is an index of about 500 companies, making it a much broader barometer of the U.S. stock market.  Moreover, it is market-weighted, so the largest companies by market capitalization carry the greatest weight.

Headline vs. Reality

Headline: On February 5, 2018, the Dow experienced the largest point drop in history.

Reality: On February 5, 2018, the S&P 500 declined 4.10 percent, which ranks as only the 39th worst in the last 40 years.

Why has the stock market declined?

Believe it or not, the recent declines were prompted by good news.

January payroll reports show 200,000 workers were added to U.S. payrolls and, more importantly, average hourly wages increased 2.9 percent from January 2017. This was the highest level of year-over-year wage growth since June 2009. In anticipation of a strong jobs report and a pick-up in wage inflation, bond markets drove yields on the benchmark 10-Year U.S. Treasury bond sharply higher from a closing level of 2.63 percent on Thursday, January 25 to an intraday high of 2.88 percent on Monday, February 6. This sudden rise in market interest rates spooked equity investors in several ways. It could indicate both a faster pace of Fed rate hikes to keep up with inflation and an increase in borrowing costs for U.S. corporations.

What should I do about it?

I don’t get emotional about stock market swings.  Stock market swings are sometimes irrational.  Look to the fundamentals instead.  In my view, nothing has really changed in the last week from a fundamental or economic perspective. We believe the cyclical backdrop for stocks remains positive given synchronized global growth, rising corporate profits and relatively easy monetary conditions compared to history in the U.S. and abroad.

At RCB Bank Trust, we are conservative, long-term investors. 

We don’t try to time the market and we don’t overreact to headlines and short-term volatility. That being said, this is a great time to gut-check your risk tolerance and make sure your asset allocation is right.

We offer free portfolio reviews at no cost, no obligation. We’d be happy to take a look at your current portfolio and offer a second opinion to ensure you’re getting the most out of your investments. Connect with a wealth advisor in your area.

Investment products are not a deposit. Not insured by the FDIC or any federal government agency. Not guaranteed by the Bank. Subject to risk and may go down in value.
Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investments mentioned may not be suitable for all investors. The material is general in nature. Past performance may not be indicative of future results.
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Without Risk There is No Reward

knob showing risk and return

When it comes to investing, a person’s risk tolerance is an important factor in determining how their portfolio should be allocated.

I use a questionnaire to help me understand a person’s tolerance for risk. I use this information, along with other criteria, to recommend investments and the overall makeup of a portfolio.

What is risk tolerance?

Risk tolerance is an investment term that refers to your ability to endure market volatility. All investments come with some level of risk, and if you’re planning to invest your money, it’s important to be aware of how much volatility you can endure.

When gauging your tolerance for risk, consider the following factors:

Personality: Are you able to sleep at night knowing that you’ve put a portion of your hard-earned dollars at risk in a particular investment? Remember, it might be easy to tolerate a high-risk investment while it is generating double-digit returns, but consider whether you’ll feel the same way if the market takes a downward turn with your investment leading the way. It’s best to invest at a level of volatility that you are comfortable with.

Time horizon: The sooner you may need to use your investment dollars, the lower your risk tolerance. For example, for money you plan to use to make a down payment on a house in 2 years, your risk tolerance is lower than if you’re investing for retirement in 20 years. If you can keep your money invested for a long period of time, you may be able to ride out any downturns in the market (though time alone is no guarantee of higher returns).

Capacity for risk: How much can you afford to lose? Your capacity for risk depends on your financial position (i.e., your assets, income and expenses). In general, the more resources or assets you have to fall back on, the higher your risk tolerance.

We offer free portfolio reviews at no cost, no obligation. We’d be happy to take a look at your current portfolio and offer a second opinion to ensure you’re getting the most out of your investments. Connect with a wealth advisor in your area.

Investment products are not insured by the FDIC. Not a deposit or other obligation of, or guaranteed by the depository institution. Subject to investment risks, including possible loss of the principal amount invested. Ask for details.
Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investments mentioned may not be suitable for all investors. The material is general in nature. Past performance may not be indicative of future results.
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Are you Financially Prepared to Live Longer?

man giving woman piggyback ride
By Nate Haberman, AAMS®, Financial Advisor

 

By the year 2040, it is projected that 14.6 million Americans will be 85 years old or older. This is triple in population from 6.5 million in 2014, according to the Administration of Aging¹.

Are you prepared financially to live longer? If you’re age 20 or older, retirement planning should be one of your top priorities. Not sure where to begin? I asked Nate Haberman, AAMS® Financial Advisor at RCB Wealth Management to share a few tips.

Figure out your retirement income needs.

Use your current expenses as a starting point. Don’t forget to factor in items like travel, new vehicles and healthcare expenses.

“A financial plan does not have to be complicated,” Haberman said. “Its purpose is to help you get from where you are to where you want to go, as well as improve the odds that you won’t outlive your money in retirement.”

Invest in your employer-sponsored retirement plan or an individual retirement account.2

Start now.

“It can be hard to plan for retirement when you are living paycheck to paycheck,” said Haberman. “But, a small amount is better than no amount. Setting aside a little bit each month will add up in the long run, especially if your employer matches a percentage of your contributions.”

Build an emergency fund.

Prepare for the unexpected and avoid tapping into your retirement savings.

“At one time or another, an expense will come up that you didn’t plan for – car repair or hospital visit,” said Haberman. “An emergency fund is there to help manage the financial risks of unforeseen expenses and potentially lessen some stress. Plus, early withdrawals from retirement accounts often have tax penalties assessed to them.”

Revise your plan along the way.

Life happens. Plan, prepare, review and adjust regularly in order to stay on track of your goals.

“A professional advisor can assist you through realistic expectations in your planning, while taking into consideration items like the age you plan to retire, inflation and taxes,” said Haberman. “A professional can walk you through all the available tools so you can better understand your options.”

While having a plan doesn’t guarantee a successful retirement, it may help you alleviate possible hardships, and allow you to live the life you want during your golden years.

Source:
1U.S. Department of Health and Human Services Administration for Community Living. Administration of Aging Profile of Older Americans: 2015. Retrieved from http://www.aoa.acl.gov/aging_statistics/Profile/2015/2.aspx
2Investing involves risk, including the possible loss of principal and there can be no assurance that any investment strategy will be successful. Before investing, carefully consider the risks, charges and expenses of the investment.
Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investments mentioned may not be suitable for all investors. The material is general in nature. Past performance may not be indicative of future results.
Investment products are not insured by the FDIC. Not a deposit or other obligation of, or guaranteed by the depository institution. Subject to investment risks, including possible loss of the principal amount invested. Ask for details.
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